The ATO will focus on chasing debts and artful tax dodgers now that Australia is returning to normal post-COVID, acting assistant commissioner Sylvia Gallagher said.
Speaking at the Accountants Daily Strategy Day in Sydney last week – and again at the event in Melbourne on Wednesday (9 March) – Ms Gallagher warned that the ATO would take a firm line on anyone trying to avoid their tax obligations.
While the ATO realised that agents and their clients were still adjusting to life after COVID, a failure to respond would raise a red flag, she said, as the office attempts to reduce increased debt levels.
“In 2020 we paused compliance activity except where there was seriously grievous behaviour,” she said.
“We stopped phone calls. We stopped debt collection. We stopped any follow-up of lodgments.
“We’ve gradually started to come back. The debt book has risen and we’re focused on that – and will be for the next few years I suspect.”
The ATO would try to tailor solutions to individual circumstances, but it knew that the longer debts were outstanding the more problematic they became.
“We know the longer a debt is left unattended, the harder it is to pay off,” she said.
“We wanted to strike the right balance to give people enough leeway so that they weren’t feeling pressured. But so that they weren’t in a far worse situation down the track.
“However, if someone is deliberately trying to not engage with us then we will take further action. We’re not going to shy away from it.”
She said the office would always attempt to contact a taxpayer to resolve a problem before taking action and allow sufficient time for a response. But after that, the gloves came off.
“We only resort to stronger action when people refuse to work with us. When they refuse to negotiate or repeatedly default on agreed payment plans. Where they don’t pay and don’t take steps to resolve the situation. Where they have been subject to an audit. Where we detect deliberate non-compliance activities,” she said.
For agents and clients in real difficulty, the ATO had support mechanisms designed to help. But a simple failure to respond was not an option.
“We don’t know someone is struggling if they don’t tell us,” Ms Gallagher said. “We just think they’re trying to avoid us. The longer people have their head in the sand and don’t engage, the more we think they don’t want to.
“If you’re really struggling someone will contact you.”
She also said that the performance benchmark for agent lodgments was intended to help, not hinder.
“The 85 per cent benchmark that everyone worries about – the really awful thing for me was that it was implemented as a support strategy, for us to understand when people were struggling,” she said.
“It was never implemented to make people afraid or stressed at tax time that they weren’t meeting their 85 per cent lodgment benchmark.
“Obviously, it’s good practice to do it. But we never acted on any compliance activity towards an agent based on the 85 per cent benchmark.
“When you lose your lodgment concession, it’s where you haven’t lodged one client’s tax return by October of the following year in which it was due. That client loses their 15 May lodgment concession, you don’t as a tax agent.”
She said the ATO was currently reviewing its lodgment program.
Ms Gallagher will also present at a second Accountants Daily Strategy Day on Wednesday (9 March) in Melbourne.
Philip King is editor of Accountants Daily and SMSF Adviser, the leading sources of news, insight, and educational content for professionals in the accounting and SMSF sectors.
Philip joined the titles in March 2022 and brings extensive experience from a variety of roles at The Australian national broadsheet daily, most recently as motoring editor. His background also takes in spells on diverse consumer and trade magazines.