Up to $50 billion owed to the Australian Tax Office as small business falls behind on payments

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Remy Varga
The Nightly
2 Min Read
Businessman must pay taxes-Paying taxes concept
Businessman must pay taxes-Paying taxes concept Credit: treety - stock.adobe.com

About $50 billion is owed to the Australian Taxation Office in uncollected debts, with an increasing number of businesses falling behind on payments amid lower-than-average consumer sentiment and tough operating conditions.

ATO commissioner Rob Heferen will tell the Council of Small Business Organisations Australia summit on Thursday that more than two-thirds, about $32.5 billion, of the outstanding debt is owed by small businesses.

About 74 per cent, or $24 billion, relates to activity statements. It comprises unpaid goods and services tax charged to consumers and PAYG tax withheld from the pay of employers.

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“We are seeing an increasing number of businesses fall behind on these types of payments, from which point it is very difficult for businesses to get back on top of their obligations and remain viable,” Mr Heferen will say on Thursday.

“It’s critical that all employers — big and small — keep on top of their obligations to their employees first and foremost, as well as their obligations to the government in respect to GST, income tax, and other taxes.”

The ATO resumed a tougher line on tax collection in December last year and reactivated existing debts frozen in 2020 due to the COVID-19 pandemic, including unpaid GST and PAYG debts.

Mr Heferen will on Thursday say that he has been informed by small businesses that pay their taxes that it is unfair some of their competitors continue to escape penalty while ignoring their tax bill.

“Many of your members are telling us how concerned they are about the unfair competitive advantage businesses not complying with ATO obligations are getting over those who are doing the right thing,” he will say.

“There’s also a significant risk of businesses trading whilst insolvent and creating a situation where all creditors – including suppliers and employees miss out on what they are owed.”

Consumer confidence is at 82.8 on the ANZ-Roy Morgan Consumer Confidence Index, which has now recorded 61 consecutive weeks below the target rate of 85.

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