The Australian Tax Office (ATO) has flagged collectable debt and improving small business tax performance as key focus areas over the remainder of the 2023/2024 tax year. A priority will be chasing down unpaid superannuation guarantee charges. More broadly, the ATO is sending a message that the leniency afforded during the pandemic can’t be sustained as the amount of debt owed to the ATO increasing from $26.5 billion in June 2019 to $50.2 billion in June 2023.
The ATO has also specifically identified small businesses as a concern and overrepresented amongst the taxpaying sectors with debt outstanding. Practically this means that while the ATO will be targeting all outstanding debt, some of the key focus areas will be unpaid superannuation, debt arising from ATO audits, fraud and aged/high-value debts.
In a recent speech, Tax Commissioner Chris Jordan said small businesses continued to be over-represented in the ATO’s debt book, owing over $33 billion of the $50.2 billion of collectable debt. $23 billion of that is unpaid business activity statement debt.
“I want to make this point clear: although small business is overrepresented here, we obviously are very focused on every group in the tax system,” he said. “There are a growing number of profitable businesses who have the capacity to pay their bills but are choosing not to. Businesses appear to be de-prioritising payment of tax and super.”
What this means for you
Given these statements, we expect the ATO to send a clear message to the business community after a few uncertain years focusing on the following areas:
High value debts
The ATO will target high value debts, with a priority on those who have multiple outstanding obligations, defined as those exceeding $100,000 and surpassing two years in age. The ATO says its analysis shows a strong pattern of clients who are missing multiple payments are also at high risk of trading while insolvent. Any businesses with long-standing financial obligations that have not been settled should contact us immediately.
Recovery of Superannuation Guarantee debts
Small businesses account for a significant portion of the $1.8 billion owed in unpaid superannuation guarantee charges. To rectify this, the ATO plans to expand the use of Single Touch Payroll (STP) data to try to simplify employer reporting obligations and proactively address super guarantee non-compliance. The ATO is also matching data from superannuation funds with the amounts reported by employers through STP for each employee-employer relationship to actively identify those taking advantage of non-payment of employee entitlements.
How Falanga & Co can help
If you are unclear about your situation and what strategies might be available to you, the Falanga & Co team are always here to help. For existing clients please get in touch with your Falanga & Co accountant today. For those who are not Falanga & Co clients and need assistance, we invite you to click here to schedule a discovery call with a member of our team.
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