Tax review change needed: Vos

THE Inspector-General of Taxation David Vos has recommended changes to the Australian Taxation Office’s small business debt collection practices and its administration of GST refunds. Mr Vos said the ATO should improve its systems to achieve a better balance between timely GST refunds and the prevention of fraudulent or incorrect refund claims. In regard to debt collection arrangements, Mr Vos concluded that the ATO is not systematically being unnecessarily harsh with, or too quick to take legal action against, small business tax debtors. However he recommended that the ATO should differentiate small business tax debtors that want to comply with their payment obligations but need short-term assistance, from firms that are either incapable of meeting their obligations or are in serial default. Mr Vos also called for new administrative approaches to assist small businesses manage their cash flows better, in order to meet tax liabilities. The minister for revenue Mal Brough said the commissioner of taxation has agreed with and accepted the recommendations. He added that the ATO is already implementing a ‘small business debt initiative’, which offers protection from legal recovery action to about 300,000 eligible small businesses with debts under $25,000 on the condition they enter an arrangement to repay their tax debt by direct debit within specified time frames. He said the Inspector-General supports the initiative as a positive encouragement to small businesses to finalise outstanding debts.