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Report on ATO debt recovery action

Report on ATO debt recovery action

Ross Hocking, Andy Bubb & Alice Chow discuss the ASBFEO's recently released report on the ATO's debt recovery action.

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Following extensive media coverage of the Australian Taxation Office’s (ATO) alleged unfair treatment of small business taxpayers last year, particularly in a Four Corners program, the Inspector-General of Taxation and the Australian Small Business Family Enterprise Ombudsman (‘ASBFEO’) have conducted reviews of ATO debt recovery practices for small businesses.

The ASBFEO recently released its report on debt recovery action for small businesses in dispute with the ATO at the Administrative Appeals Tribunal (‘AAT’) during 2017-18.

The ASBFEO’s three key conclusions in the report were that:

  1. the failure of a small business can be caused by strong forms of debt recovery action by the ATO (being garnishees, director’s penalty notices, statutory demands, and sequestration or winding-up applications);
  2. ATO staff should exercise their decision-making power proportionately, and consistently adopt all internal policies and guidelines with objectivity and transparency, in respect of debt recovery action; and
  3. interactions with small businesses should be far more tailored and nuanced as small businesses are ‘notoriously time poor and the process of repeatedly dealing with the ATO is overwhelming’.

Furthermore, the ASBFEO made seven recommendations in the report. Notably, these include allowing a taxpayer before the AAT to request a stay of any ATO debt recovery action, external oversight of garnishee orders, and further use of dispute resolution processes within the ATO. The ATO Commissioner released a statement commenting on the report and its recommendations shortly after it was released.

To read more about the ASBFEO's report on ATO debt recovery action, please log on to KPMG Tax Now.

Register for KPMG Tax Now to access more tax-related articles.

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