The Australian Taxation Office (ATO) has been called on to soften its debt collection practices from small businesses despite the owed amounts reaching record levels.
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell (pictured) made the call when releasing a new report on how the tax system works for small business.
Ms Carnell said she was concerned small businesses might be subjected to the Office’s “heavy handed tactics” and harsh debt recovery actions inflicted prior to the COVID-19 crisis.
She noted the collectable debt owed to the ATO had peaked at $34 billion — $21 billion of which was owed by small business.
“The ATO rightly took a softer approach towards small businesses during the COVID crisis, but we don’t want to see a return to the extreme enforcement actions my office brought to light just a couple of years ago,” Ms Carnell said.
“Previous actions, such as garnishee notices, have crippled small businesses, so it is critical the ATO uses its powers proportionately and appropriately, particularly as small businesses work to get back on their feet.”
She has called for a range of reforms to address her concerns regarding the ATO’s treatment of small businesses in a new report, A Tax System That Works for Small Business.
Recommendations in her report includes waiving interest and penalties for a first offence, restricting ATO review and audit periods to one year when a small business is using an accredited tax or BAS agent, and immediately ceasing debt recovery action against a small business that is seeking a review of its tax position.
“It’s important that small businesses in dispute with the ATO are given a fair go,” Ms Carnell said.
“The ATO quite reasonably sees its role as an enforcer of taxation laws, but too often it loses sight of the people running the business.”
She said this was particularly evident in the area of debt collection — “but it’s exacerbated by our overly complicated tax laws”.
The Ombudsman’s 29-page report can be accessed at this PS News link.
