Tax debts owed by Australians and Australian businesses have been steadily increasing. And that was even before the impact of coronavirus hit, starting in March 2020.
The total debt on the ATO’s books was $49.6 billion at 30 June 2019. With what the ATO determines as being collectable debt, that is debt owed by individuals, businesses and super funds which the ATO considers it can collect in the future, reaching a record $26.6 billion. This is up from $23.8 billion as reported at 30 June 2018.
The types of debt owed to the ATO at 30 June 2018 and 30 June 2019 was as follows:
| Type of Debt | 2018 ($) Billions | 2019 ($) Billions |
| Collectable Debt | 23.8 | 26.6 |
| Debt Subject to Objection or Appeal | 9.9 | 11.3 |
| Debt Owed by Entity Subject to Insolvency Appointment | 7.0 | 7.5 |
| Uneconomical to Pursue | 1.1 | 1.4 |
| Irrecoverable at Law | 3.7 | 2.8 |
| Total | 45.5 | 49.6 |
Impact of Coronavirus
With the financial impact of coronavirus being felt from March 2020 onwards, no doubt the total amount of debt owed by Australians and Australian businesses has increased. During the coronavirus pandemic period the ATO has been very lenient with its debt recovery practices and has been amenable to tax deferments and long-term payment arrangements. However, this will only mean businesses and individuals have incurred more tax debts, which they will ultimately have to deal with.
What Can the ATO do to Collect Tax Debts?
Whilst the ATO is holding off on certain types of recovery action at the moment, at some stage it will begin proactively chasing outstanding tax debts. This can include it taking such steps as:
- Issuing Director Penalty Notices to company directors to make them liable for a company’s unpaid PAYG Tax, GST and superannuation.
- Issuing Garnishee Notices to a company’s bank or other parties.
- For individuals who owe tax debts, issuing Garnishee Notices to their employer to garnishee their wages.
- Taking action to liquidate companies or bankrupt individuals.
Is your tax debt is increasing?
If your tax debt is increasing, or if you or your business are having difficulties paying your tax debts, the professionals at TAX DEBT SOLVED can help with a free, no-obligation consultation, so contact us here.
