Debt No More
The debt owed to the Australian Taxation Office (“ATO”) has ballooned to over $19.5 billion. Tax debt has increased by 10% as of June 2014, compared to the previous year’s figures. It seems that the Australian tax debt is growing at a much faster rate than the ATO’s debt recovery can keep up with.
In an effort to reduce the amount owed, the ATO will be taking quicker action to recover its debts. This effort is in accordance with the ATO’s recently published policy, the “Firmer Action Approach”. The policy specifies a range of recovery options that will be utilised by the ATO, which include issuing director penalty notices or taxation garnishee notices, in some instances, initiating bankruptcy proceedings and company winding up proceedings for parties with large tax debts.
Previously the ATO waited for a company debt to reach levels of approximately $340,000 and $300,000 for individuals, before initiating bankruptcy proceedings. However, the ATO’s new benchmark could be reduced to around $35,000 for individuals and $93,000 for corporations.
Due to the large amount of tax payer debt, the ATO is now taking earlier legal action whenever it is necessary. For example, the ATO are:
using statutory powers where businesses have failed to pay employee superannuation entitlements
initiating bankruptcy proceedings where there is evidence that indicates a taxpayer is insolvent
With the ATO strengthening their efforts in debt recovery, tax payers that fall behind are left with less time to resolve issues before the ATO pursues them for repayment. This means that we are likely to see an increase in personal and corporate insolvencies, compared to recent times.
If you require any further information in relation to the article above, the team at The Quinn Group can help. Contact us on 02 9223 9166 or submit an online enquiry.
– See more at: http://t11.blgvt.com/ato-to-strengthen-its-debt-recovery-efforts/#sthash.IcSiB08Y.dpuf