The ATO has taken virtually no recovery action to collect tax debts since the start of the Covid-19 pandemic. However, they are now beginning to engage with businesses to collect tax debts and will take future recovery action as necessary. This will be a soft engagement at first.
ATO Commissioner Jeremy Hirschhorn has recently said that while the ATO will now be taking steps to collect tax debts, it will seek to engage with businesses to enter into payment arrangements at the first instance. He has said:
“We want people to re-engage. It’s a relatively soft engagement. We get that it’s really hard to go from nothing to full payment. We are expecting a lot of payment plans to really try to get businesses gradually back fully into the system. But what we don’t want to do is to support companies or businesses all the way through a pandemic and then by dialling debt collection up too quickly, we destroy the very thing that we’ve been trying to support.”
This is in contrast to the ATO’s previous position regarding debt collection which Mr Hirschhorn summarised as follows:
“We turned off debt collection, we turned off lodgement chasing up, we really dialled back almost to no new audit activity, and gave taxpayers the opportunity to say, ‘Do I want to pause my existing compliance activity, continue it or slow it?’, so we really tried to put that in the hands of the taxpayer.”
Some businesses cannot pay their tax debts
However, there will be lots of businesses out there which simply can’t pay their tax debts as the total tax owed to the ATO has significantly increased since the start of the Covid-19 pandemic. The total collectable tax owed to the ATO has reached around $38 billion at 30 June 2020.
For these businesses they have to assess what options may be available to them. This may include:
- Liquidationhttps://taxdebtsolved.com.au/ato-risks/liquidation/;
- Voluntary Administration; or
- New Small Business Restructuring
But the best thing a business with a tax debt can do is get professional advice and get that advice as early as possible. And this is where TAX DEBT SOLVED can help
Contact us for help
So, if your company can’t pay its tax debts, please contact us today for a free, no-obligation consultation.
