(21 March 2024 – Australia) The Australian Tax Office (ATO) is aggressively pursuing over A$34 billion worth of small business tax debts after enforcement action was relaxed during the pandemic.
The rapid shift is anticipated to result in insolvencies for many SMEs Nassim Khadem reports for the ABC. Pre-pandemic, the ATO was winding up 40 companies a week in court however as of February 2024 this figure has more than tripled to 130.
Total collectable debt owed to the ATO increased to A$52.4 billion at the end of 2023, double the pre-pandemic value of A$26.4 billion. Small business debt accounts for A$34.1 billion, or two thirds of total collectable debt.
Stricter debt recovery action against SMEs is occurring concurrently with the ATO reviving old tax debts, leaving many individuals struggling to repay and some at risk of losing their homes.
“Whilst we understand some taxpayers are having difficulty paying on time and we take a supportive approach to help these taxpayers get back on track, we also see a proportion of small businesses that have capacity to pay but are choosing not to. While the ATO is often a major creditor in wind-up cases, it is only a minor initiator of insolvency” an ATO spokesperson said,