October 31 was an exciting day indeed. On that day, the ATO issued its annual report, 313 pages of jaw dropping “tax facts” for FY25, such as:
- There are 21,493 employees at the ATO, compared to 21,663 last year.
- The ATO’s social media following has grown to 684,821 followers – an increase of 11% from the previous year.
- The minimum salary at the ATO is $31,512 pa, paid to “cadets while undertaking study”. The maximum wage at the ATO is $413,142 per annum paid to SES3 level employees (SES being a “Senior Executive Service”).
But the most interesting tidbits extracted from the report is that the ATO collected $636 billion in tax revenue in FY25, an increase in revenue of 4.09% from the previous year.
Even more interesting is the fact that the ATO has cracked the tonne for the first time, with total outstanding debt of $101 billion. This is up from $45 billion in FY19.
Whilst $77 billion of this is collectable or subject to appeal, nearly $25 billion is basically uncollectable, and includes two very interesting items (to me at least):
- Insolvency debt of $18 billion, up $4 billion from last year. Given we’re experiencing record high numbers of insolvencies at the moment, it makes perfect sense that the level of ATO insolvency debt is at record highs, and
- A new category included in the annual report this year is “non-pursued uneconomical” debt which is currently $6 billion. The report notes that in previous years this category was “n/a”. Most of the $6 billion non-pursued uneconomical debt is owing by either individuals or small business.
This little development makes one wonder whether the ATO has relaxed its public interest/level playing field mentality by writing off material amounts of debt in instances where there is no formal insolvency. An interesting item to keep an eye on in future years. If it escalates, the financial community would be within its rights to ask “who’s getting the free ride?”.
We all know that the ATO is cracking down on non-complying taxpayers for the first time really since Covid and that between 2020 and 2024 no real proactive collection activities were undertaken. This has clearly changed, and we are seeing more DPN’s, statutory demands and garnishees now then we have for five years.
The graphs below tell the story.
The first graph shows that since FY19, the percentage of debt to total revenue has increased from around 10% to around 16% in FY25. Although, bad debts of $25 billion on a turnover of $636 billion is not bad at all. 3.87% in fact; I’d take that. Government – what a great business model!
The second table demonstrates how the percentage of insolvency debt to total debt dipped during the Covid years but now is on a steady incline reaching around 18% currently.
The telling stat in my view is that tax debt is now 16% of total revenue (the purple line in Table 1), a percentage the government would clearly like to reduce. If the ATO focuses on those growing debt levels, we liquidators will be busy for a few more years yet.
The full annual report can be accessed on the ATO’s website.
Article by David Stimpson (QLD Executive Director) – Brisbane
