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How the ATO Will Refocus on Debt Recovery in 2022 (Steps to Improve Outcomes)

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The Australian Tax Office ceased tax debt collections as a measure to assist business when COVID struck in early 2020.

The debt outstanding with the Australian Tax Office (ATO) is reported to be around $55B as of 30 June 2021, likely to be materially higher now in early 2022.

In late 2021, the ATO warned that debt recovery actions would recommence in a “tailored approach”.

The level of tax debt will continue to mount as the ATO eases back into a normal collection cycle.  However, the ATO debt recovery teams are likely to take a more proactive approach to reverse increasing tax debt.

Fiduciary Duties of Directors

Director Penalty Notices

While the ATO will use the usual collection and repayment methods, the most effective tactics they have at their disposal are garnishee notices and director penalty notices as mechanisms to encourage/force recovery of outstanding debts.

 

ATO Tax Payment Plans

Quite appropriately, Australian businesses received a free kick from the Government through the cash boost to support the ongoing employment of staff through JobKeeper payments. Businesses also benefitted from the ATO offering very supportive long term repayments arrangements to encourage opportunities financially and help companies survive.

 

Fiduciary Duties of Directors

It is crucial now to ensure all compliance responsibilities are adhered to. Your BAS needs to be lodged regardless of the ability to pay the amounts disclosed.

“Not lodging a BAS is the simplest way to expose yourself for personal liability under a Directors Penalty Notice and immediate loss of income through a garnishee notice.”

Stuart Craig

The ATO is now more interested in outstanding amounts of superannuation not paid for employees and the tax deducted from employees’ wages.

 

How Best to Proceed

The best advice we can provide is to seek professional assistance to formulate resolution strategies and communicate with the Australian Tax Office.  It is much better to dialogue with them rather than remain silent.

With imminent tax debt recovery action by the ATO to enforce payment, inevitably, businesses may not be able to prolong unpaid tax debt without consequences.

If you are concerned about your position, an obligation-free chat with one of our team is easy to arrange.

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Get help today

Start with a no-obligation chat with a financial councillor about where your business sits right now and how to formulate resolution strategies and communicate with the Australian Tax Office.

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When you find your business is in financial distress, seek expert independent advice for clarity on exactly what your predicament is, what your options are and how to maximise the protection of your personal assets.

I hope you enjoy reading this post.

If you want my team at Climb Business to help you stabilise and take back control of your business, just book a call.

I hope you enjoy reading this post.

If you want my team at Climb Business to help you stabilise and take back control of your business, just book a call.