Tax office issues fresh warning on $50bn debts

The Commissioner of Taxation has warned small businesses to keep on top of their tax obligations as it cracks down on $50 billion worth of unpaid debts across the board.

Speaking at a small business event, Rob Heferen said the amount of collectable tax had surpassed $50 billion.

Given the small business population of 6.7 million, it was a critical group for the overall tax system, he said.

Mr Heferen, who became tax commissioner in March, said 65 per cent of all collectable debt owed related to small businesses, and 74 per cent of that related to activity statements.

“This means a significant portion of the amount going unpaid is GST collected from consumers or PAYG withholding, withheld from employees pay,” he said.

“We are seeing an increasing number of businesses fall behind on these types of payments, from which point it is very difficult for businesses to get back on top of their obligations and remain viable.

“It’s critical that all employers – big and small – keep on top of their obligations to their employees first and foremost, as well as their obligations to government in respect to GST, income tax, and other taxes.”

In December, the tax office ended its special debt collection arrangements brought on during the pandemic and returned to regular debt collection across all markets.

Mr Heferen said ensuring taxpayers paid their tax and super obligations was a key focus for the ATO.

During his address, the commissioner warned of the significant risk of trading whilst insolvent for all parties.

“Many of your members are telling us how concerned they are about the unfair competitive advantage businesses not complying with ATO obligations are getting over those who are doing the right thing,” Mr Heferen said.

“There’s also a significant risk of businesses trading whilst insolvent and creating a situation where all creditors – including suppliers and employees – miss out on what they are owed.”