The Australian Taxation Office is “unapologetic” about collecting unpaid debts from the small business sector, commissioner Chris Jordan says, giving one final warning to enterprises deliberately holding on to overdue payments.
In a speech to the Institute of Public Accountants on Thursday, Jordan reiterated how the tax office’s stature to overdue payments has changed over the past 18 months, from pandemic-era leniency to an active collection strategy.
That change is shown by the recent issuance of 31,000 Director Penalty Notices.
Such a transition is necessary to recoup the $50 billion of collectable debt — the majority of which is being held by small businesses, Jordan said.
The majority of small businesses endeavour to do the right thing when meeting their tax and superannuation requirements.
But despite the best intentions of many small businesses, Jordan said the size of the sector’s debt burden requires a concerted response from the ATO.
“Addressing collectable debt is a priority,” he said.
“The softer approach required during the pandemic could not continue indefinitely.”
Jordan noted the efforts of small businesses who seek advice from qualified tax professionals and those who confess their debts to the tax office before they spiral out of control.
“We know owning a small business and cashflow challenges can go hand in hand,” he said.
“We have options available for those experiencing financial difficulties, but taxpayers or their professionals must engage with us prior to the due date.”
However, the commissioner of taxation expressed little mercy for those intentionally gaming the system.
The ATO has reset its debt focus to include “non or late payment across all business segments, including small businesses,” he said.
“I am unapologetic about this.
“The ATO is not a bank offering cheap loans and a cashflow buffer.
“Paying tax isn’t optional.”
The commissioner spared even less mercy for businesses operating in the ‘shadow economy’, which deliberately run ‘cash in hand’ jobs or fail to lodge their tax in order to obtain an unfair advantage.
To make the point, Jordan highlighted the ATO’s Shadow Economy Program, which is dedicated to unearthing those hidden tax obligations, and successfully raised $1.4 billion in 2022-2023.
“I want to reiterate: the majority do the right thing,” he added.
“That’s why it is unfair and unacceptable for the minority to delay or avoid their obligations without consequence.
“If a business takes GST from a customer, withholds tax from an employee’s pay or does not pay super, they must remit it to the ATO – it is not their money.”
Small businesses looking to effectively navigate their overdue payments should consider taking advantage of the Failure to Lodge penalty amnesty, which expires on December 31.
“For those unwilling to work with us, we will take strong and deliberate action,” Jordan said.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
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