The ATO issued an important media release on 13 May 2022 to remind taxpayers with overdue tax debts to engage the ATO for tailored assistance. The ATO highlighted that it is ramping up its collection activities against those who do not engage the ATO or resist repaying tax debts.
Taxpayers who have difficulties with tax debts are encouraged to engage the ATO or their registered tax agents to set up appropriate payment arrangements.
Where taxpayers do not engage and do not contact the ATO, the ATO is taking firmer debt collection activities. These include garnishees, recovery of director penalties, disclosure of business tax debts to credit agencies, and legal actions including summons, creditors petition, wind-up and insolvency action. The ATO prioritises those taxpayers representing higher risks and refusing to engage. It also prioritises taxpayers with superannuation guarantee debts irrespective of their debt value, as the superannuation guarantee is an entitlement that is owed to employees.
In particular, the ATO has recently written to businesses under 2 awareness programs — disclosure of business tax debts and the use of Director Penalty Notices (DPNs). It has sent 29,552 awareness letters for disclosure of business tax debts and 52,319 awareness letters about the use of DPNs. More than 20,000 taxpayers have since responded, by making payments or entering into payment plans.
For those taxpayers who have not responded and are not engaging, the ATO will move to the next steps:
• for disclosure of business tax debts, the ATO has issued nearly 300 intent to disclose notices and has commenced disclosing some of these to Credit Reporting Bureaus Equifax and Creditor Watch
• for companies with outstanding obligations, the ATO is currently issuing 30 to 40 Director Penalty Notices per day and expects that to increase. The ATO is pursuing the directors personally for outstanding company obligations.
The ATO will also recommence offsetting tax refunds and credits to pay off other debt that the taxpayer has with the ATO from June 2022. The ATO may use credits a taxpayer is entitled to from other government agencies to pay off ATO debt obligations.
Taxpayers experiencing difficulties in meeting their ATO obligations should contact their tax agent for assistance.
Please contact us to find out more. The team at EMspire Advisory are experienced accountants, bookkeepers and tax agents in Sydney.
Please note that this information is not specific and is general in nature and cannot be relied upon as advice. Please contact us for specific advice for you and your circumstances.