In a speech to the Tax Institute on 19 March 2015 the Tax Commissioner, Mr Chris Jordan, gave notice that the ATO is bringing forward the point at which it takes legal action to recover debts from both individuals and companies.
Mr Jordan stated that “despite our increased efforts, the amount of debt we have to collect has continued to rise in recent years”. This is concerning at a time when the budget position is deteriorating. Of significance is that the value of collectable debt was almost $19.5 billion at the end of June 2014 – up almost 10% on the previous year.
Mr Jordan went on to indicate that “we will be taking legal action earlier when warranted. This means initiating bankruptcy and wind up action where there is evidence that a tax payer is insolvent, and looking to use other statutory powers where businesses have failed to pay employee superannuation entitlements or pay amounts held in trust. In the past we have waited for taxpayers debt to escalate to an average over $300,000 before initiating bankruptcy proceedings, compared to other creditors who often take action at around an average of $35,000. For Corporates we wait for their debt to be more than $340,000 compared to other creditors who initiate action at an average of $93,000”.
It is not hard to work out that the ATO are starting to get serious about monies that are owed to them particularly by business’s that appear to be insolvent.
If your business or personal debt to the ATO or indeed other creditors is unable to be paid, contact us and we may be able to assist you in either restructuring this debt or coming to an arrangement with the ATO to your benefit.
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