The ATO’s latest annual report has detailed the effects of the pandemic on its audit and debt collection activities, with the Tax Office collecting $13.7 billion against a performance target of $15 billion.
The Tax Office had expected the target to be exceeded based off its results for the first six months to December 2019, before the summer bushfires and COVID-19 caused a rethink of its compliance approach.
This led the ATO to halt its debt and lodgement campaigns, apart from work on high-risk clients, and hit pause on audits and other compliance-related activity.
“These factors, combined with reduced capacity for many Australians and their businesses to pay compliance liabilities raised before the onset of COVID-19, led to a significantly lower-than-planned quarter four, resulting in the ATO not achieving the $15 billion target by the end of the year,” the ATO said.
Debt and lodgement activities have since restarted, with the ATO committing to a soft and sympathetic approach at the outset.
COVID-19 also saw lodgement performance for the 2019–20 year drop, with 74.6 per cent business activity statements lodged on time, 2.3 per cent lower than the previous year and well short of the ATO’s target of 78 per cent.
“The 2019–20 bushfires and the effects of the COVID-19 pandemic across Australia, particularly for small business, were significant factors,” the ATO said.
“By volume of activity statements, small business is the largest segment, so a change in on-time lodgement behaviour for small business has a significant impact on the on-time lodgment performance across the overall population.”
On the whole, net tax collections for the financial year were $404.7 billion, down by $21.2 billion from the previous year and $33.9 billion below budget forecasts.
Company tax collections fell by 10.3 per cent while individual tax collections dropped by less than 1 per cent or $1.8 billion.
Superannuation income tax collections decreased by 44.4 per cent, reflecting a significant increase in franking credit refunds and lower earnings due to COVID-19.
GST collections also decreased by $5 billion or 7.6 per cent, $7 billion lower than budget forecasts, reflecting the economic impact of COVID-19.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.