IGTO Karen Payne said the new debt review was prompted by the ATO’s annual report, which showed a debt book of almost $45 billion, with collectable debt accounting for more than half of that amount, and rising every year for the past four years.
Small businesses account for the majority of collectable debt at $16.5 billion, followed by privately owned and wealthy groups at $5.6 billion.
“If a tax debt is not disputed as to liability or amount, the community would expect that taxes would be paid as and when they fall due,” said Ms Payne.
“Our ‘collectable debt’ investigation aims to gain a clear line of sight as to the characteristics of participants that are contributing to increasing undisputed debt.
“These might include sectors of the economy, debtor age, debt components – penalties, interest and primary tax, industries and taxpayer size and scale – and therefore indicate individuals and businesses potentially needing help in paying their debts.”
This will be first review overseen by Ms Payne, who was appointed to the role in May, taking over from former IGT Ali Noroozi who spent 10 years at the helm.
The second review will examine the tax administration of deceased estates and the ATO’s approach to dealing with such matters, fuelled by complaints raised by tax practitioners and taxpayers.
“My office has received complaints about how difficult it can be to deal with tax matters for deceased estates,” said Ms Payne.
“This message has been reinforced when I have been out and about speaking with tax practitioners.
“Thus, I want to look into the management of this area by the ATO, its communications and processes and any legislative constraints in order to see what improvements might be made to streamline, improve, and de-stress the process.”
The review comes as the ATO continues to grapple with a “legal impediment” that is preventing tax practitioners from accessing information relating to deceased estates on the ATO’s new online services for agents.
While tax practitioners are still able to access that information in the old portals, the issue is set to come to a head once the tax and BAS agent portals are decommissioned by March 2020.
Ms Payne said her office would aim to complete and release the reports from the two investigations early 2020.
“I want our reviews to be targeted and timely, with recommendations for improvements made available as quickly as possible – in other words, before the world has moved on,” said Ms Payne.