The ATO has been released from its shackles

Steven Staatz

Over the last couple of years, almost everyone has been adapting and adjusting to lockdowns, home schooling, working from home and doing whatever they need to, just to try and stay sane whilst earning a living.

However, unless you move in the accounting and/or legal circles, what might not have been obvious to most is that the ATO was shackled – prevented from pursing tax debts during the periods of extended lockdowns and general economic and financial uncertainty.

This period of “down tools” from pursuing tax debts has provided the ATO with time and resources to develop, implement or improve in other areas; such as Single Touch Payroll, myTax and the automatic capturing of income data, direct links into the Land Titles Office and share registries when assets are sold, assurance reviews of the larger taxpayers, and monitoring the reporting obligations of businesses regarding income tax and GST, with a particular emphasis on unpaid superannuation. As a result of these enhancements, the ATO now has a large amount of data at its disposal, to analyse and cross reference with other Government agencies and departments.

With the general 2021 income tax return lodgement period ending on 31 October 2021 and many of the COVID-19 restrictions gradually being lifted across the country, the ATO issued a statement on Tuesday, 16 November 2021 confirming that it will now be actively pursuing outstanding tax debts. The moratorium on the ATO pursuing tax debts has abruptly come to an end.

One area the ATO will be focussing on, is where clients have mistakenly (or intentionally) claimed and/or utilised the small business CGT concessions in recent years when they were not actually entitled to make such a claim and receive such a concession.

A second focus point for the ATO revolves around overdue Business Activity Statements, income tax returns and other tax lodgements, which have significantly contributed to the record $55 billion in taxes currently owed to the ATO.

According to the statement by the ATO, taxpayers with higher tax debts or those with Superannuation Guarantee Charge debts – irrespective of their debt value – may be pursued in priority to other tax payer debts as soon as this calendar year, with the balance of overdue tax payers likely to be pursued by the ATO commencing in the new calendar year.

For tax payers hoping to avoid the imminent wrath of the ATO, one strategy to prevent or at least minimise ATO penalties and enforcement prospects, is to ensure all taxation lodgements are brought up to date and to then request and maintain, a sustainable and achievable payment plan.  This strategy aligns with the ATO’s stance on taking “a tailored approach” to lodgement and payment enforcement, understanding that some sectors and industries have been affected more than others as a result of COVID-19 restrictions.

Alternatively, if a payment plan is not an option and/or directors of companies and business owners are wanting to minimise their personal exposure to debts, they should seek the advice of a qualified insolvency expert to discuss available options.

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