The Australian Taxation Office (ATO) is sharpening its focus and intensifying efforts to recover a staggering $11 billion in tax debt, signalling a significant shift in its approach towards debt collection.
Tax Commissioner Rob Heferen has made it clear that the ATO is prepared to use its ‘full powers’ to target the relatively small number of taxpayers who are responsible for a disproportionately large share of the tax debt.
In a recent address to the Senate Economics Legislation Committee, Heferen revealed that just 22,000 taxpayers, which equates to roughly 1 per cent of all debtors, are accountable for 20 per cent of the total tax debt. This group, which includes taxpayers of various sizes, not just the largest ones, is now squarely in the ATO’s crosshairs.
The ATO’s strategy is both deliberate and targeted, focusing on those who have consistently ignored attempts to engage and have failed to respond to reminders.
‘For these taxpayers, we are moving more urgently to deploy the full powers available to us, including issuing Director Penalty Notices, taking garnishee action, and—if necessary—taking wind up action,’ Heferen said.
This crackdown is part of a broader effort by the ATO to reduce the overall tax debt, which stands at around $50 billion. After a period of leniency during the pandemic, the ATO is ramping up its debt collection activities, with a particular emphasis on priority debts such as unpaid superannuation guarantee charges—tax withheld from employees’ wages but not passed on to the government—and goods and services tax (GST) collected from customers that hasn’t been remitted.
It’s important to note that while the ATO is focusing on priority debts, ‘all tax owed to the government’ is considered important. This includes debts from individuals as well as small and large businesses.
For individuals who have lodged their tax returns independently, any tax bills were due by 21 November. Those who filed with the help of a tax agent had until 21 March 2025, to settle any outstanding tax, with extended deadlines (5 June 2025) available for those using the tax agent deferral program.
Failure to pay tax by the due date can result in the application of the general interest charge, which currently stands at an annual rate of 11.42 per cent. This can add a significant financial burden to the existing debt, making it even more crucial for taxpayers to address any outstanding obligations promptly.
Meanwhile, Commissioner Heferen has urged anyone facing financial hardship to reach out to the ATO, which is willing to work with taxpayers to find a suitable way forward. This may include setting up payment plans or exploring other options to manage tax debts.
As the ATO moves ‘harder and faster’ to collect what’s owed, it’s a timely reminder for all Australians to ensure their tax affairs are in order. If you’re concerned about your tax position or need advice on managing tax debt, it’s advisable to seek professional guidance or contact the ATO directly to discuss your situation.
For our readers over 50, managing tax obligations can be particularly important as you plan for retirement or manage your retirement income. It’s essential to stay informed about your tax responsibilities and take proactive steps to address any issues before they escalate.
We invite you to share your experiences or concerns regarding tax debts in the comments below. Your insights could help fellow readers navigate their own tax situations.
Also read: ATO’s big shake-up: Will your business be affected?
What about those who use a tax haven to avoid pay their full share of tax? I believe all money earned in Australia should be taxed fully before the money leaves Australia. More to the point companies should not be allowed to use a tax haven. Money earned in Australia should stay in Australia.