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The ATO is ramping up debt collection.

Article By Brent Charlton | | Accounting & Tax

Avoid being reported to credit reporting agencies and get your ATO debt under control.

Collectable debt to the ATO has grown by its largest ever margin, from $26.6 billion to $34.1 billion. While collection of these debts was initially placed on hold due to the challenging financial environment created by the pandemic, the ATO is now notifying businesses of their intent to commence action on these debts.

With the ATO recommencing debt collection, its important to note its increased power to report businesses to credit reporting agencies, a law passed in 2019 but until now hasn’t been largely used.

So when can the ATO report your business?

• Owe the ATO over $100,000,
• Have an ABN,
• Be in arrears more than 90 days, and
• Not have a payment plan in place or one being negotiated.

What debts are included in the $100,000 threshold?

• Income tax debts
• Activity statement debts
• Superannuation debts
• Fringe benefit debt
• Penalties and interest charges

So, you’re in debt? Proactive action is the answer.

To protectyour business and minimise financial risk, you need to act quickly and thoughtfully. The first step is work out what you can consistently commit to a repayment, knowing that all future ATO liabilities will need to be made on time. Second, armed with this information, reach out to the ATO and enter discussions about a repayment arrangement. Remember, businesses who are actively managing their debt by communicating with the ATO will not be reported to credit reporting bureaus.

We are here to help!

If you find yourself in debt with the ATO and need some assistance in navigating the ATO payment arrangement process, our team of experienced accountants are here to help!