The Australian Taxation Office (ATO) is intensifying its efforts to collect outstanding tax debts, focusing particularly on small businesses. As of early 2025, the ATO’s collectable tax debt stands at approximately $50 billion, with a significant portion owed by smaller businesses.
Key Developments in ATO Debt Recovery
In 2025 the ATO is taking the following steps to seek to recover the $50 billion it deems collectable:
• Increased Enforcement Measures: The ATO is adopting a firmer approach to debt collection, including issuing Director Penalty Notices, Garnishee Notices, and reporting tax liabilities to credit reporting agencies.
• Focus on Small Business Debts: A substantial portion of the outstanding tax debt is attributed to small businesses, particularly PAYG Tax and GST. The ATO is focusing debt collection activity on recovering these debts from small businesses.
• Engagement with External Agencies: To enhance collection efforts, the ATO has engaged external debt collection agencies, such as Recoveries Corp, to assist in recovering overdue debts.
Implications for Small Businesses
Small businesses with tax debts face mounting pressure and risks from the ATO regarding debt recovery action. Small businesses are encouraged to proactively address outstanding tax debts by:
• Engaging with the ATO: Open communication with the ATO can lead to more favourable outcomes, such as negotiated payment plans or potential debt relief options.
• Seeking Professional Advice: Consulting with tax professionals or registered insolvency practitioners can provide tailored strategies to manage and resolve tax debts effectively.
• Small Business Restructuring: Small Business Restructuring is a means of settling tax debts for small businesses so that they avoid ATO recovery action and potential liquidation.
By taking proactive steps, small businesses can navigate the ATO’s intensified collection efforts and work towards financial stability.
Contact us for Assistance
If you are having difficulties paying your tax debts, the professionals at TAX DEBT SOLVED can help with a free, no-obligation consultation. So, contact us today.
