ATO’s recent debt activity data acts as an important reminder for individuals and small business
Posted on November 01, 2024
Recent data shared by the ATO has shown the true extent of the ATO’s debt ledger, and the ATO’s increased collection activity. The data shows that:
- In the 2019/20 year, collectable debt across all “clients” totalled $26.5 billion. As of 31 March 2024, that debt had almost doubled – with a total of $51.4 billion now owed to the ATO.
- Of the $51.4 billion owed, more than 75% relates to debts of individuals ($5 billion) and small businesses ($34.3 billion).
- For small business, non-payment of BAS debt is the most significant liability, totalling almost 75% of all debts owed by small business.
- There has been a significant shift in the way that the ATO collects debt.
- In 2019/20, the ATO relied heavily upon garnishee notices, with 18,605 being issued in that financial year. By contrast, only 3,449 of these notices had been issued between 1 July 2023 and 31 March 2024.
- The ATO’s preferred collection actions now appear to be issuing DPNs to directors, and lodging business tax debt disclosures on credit files.
- Between 1 July 2023 and 31 March 2024, the ATO issued 22,708 DPNs to directors of 16,730 companies and lodged 31,995 business tax debt disclosures against credit files.
The significant debt owed to the ATO suggests that its collection activity will not slow down any time soon. If anything, we suspect to see an even further increase in activity by the ATO.
This is yet another stark reminder of the importance of ensuring your business is complying with its taxation obligations, and seeking early assistance from insolvency professionals if you are facing financial difficulty.
Written by Alice Carter, Partner and Georgia Gray, Senior Associate.
