Tax debts have been steadily increasing for many businesses as a result of the COVID-19 pandemic. When COVID-19 hit in 2020, the Australian Taxation Office (ATO) put a halt on its debt recovery action….until now.
In November 2021, the ATO broke their silence, addressing the whopping $55 billion tax debt (as at 30 June 2021) and warning that debt recovery action would recommence with a ‘tailored approach’.
With the level of debt no doubt continuing to increase, the ATO debt recovery team is back in action, now with a more aggressive collection approach. We have recently noticed an increased use of Garnishee Notices and Director Penalty Notices as a mechanism to recover the outstanding debt.
It is important that businesses with outstanding GST, and more importantly PAYG and SGC, seek resolution strategies with their professional advisor immediately.
With imminent debt recovery actions to be enforced by the ATO, it is inevitable that businesses will no longer be able to prolong unpaid tax debts without consequence.
We encourage you to proactively speak to your clients to address tax debts and communicate with the ATO accordingly.
After all, prevention is better than a cure and some well-directed insolvency advice may just prevent a bad case of Taxmanitis!
If you are concerned about a client’s financial situation, speak to one of our insolvency experts on 1800 246 801 or email at [email protected]