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ATO mulls options with on-hold tax debts

22 February 2024
ato mulls options with on hold tax debts

The Tax Office is considering potential alternatives to pursuing billions of dollars in ‘petty’ tax debts including a request for reprieve from the government.

ATO Commissioner Chris Jordan said the Tax Office is still determining the best approach to managing the billions of dollars’ worth of tax debts it deemed “uneconomic to pursue” after pausing its debt awareness campaign in November last year.

The Tax Office notified tax agents in October that it would be offsetting clients’ tax refunds or credits against debts on hold that had been written off as “uneconomic to pursue”.

The move to revive the “petty tax debts” received considerable backlash from tax agents with some tax debts as low as 4 cents.


Speaking in an address yesterday, Mr Jordan said the ATO has had thresholds in place for decades for low amounts or debt for lower income earners.

“There was a bucket of debt called uneconomic to pursue. Why spend $200 trying to chase $5? It just didn’t make sense,” he said, speaking at the National Press Club.

“There were thresholds [such as] low income, small amount of debt and very old that we just put in a bucket and never sought to collect.”

Mr Jordan said the ATO was forced to change its approach in relation to these debts after receiving a negative finding on its accounts from the Australian National Audit Office, stating that its approach did not conform with the law.

“We turned off almost all our debt collection during Covid and when we were turning the collection processes and systems back on the Australian National Audit Office asked ‘what are these things here? Why are you not collecting these uneconomic to pursue amounts?’,” he said.

“[The ANAO] said that we weren’t conforming with the law and gave us a negative finding on our accounts. Now, as a regulator, we can’t purposely not conform with law – we have to. So, we’re working our way through [it].”

Mr Jordan said the ATO is still in the process of looking at all the alternatives.

“One is to go to the Minister of Finance and say ‘can you write off those billions of dollars of debt says before 2017?’,” he said.

“That’s a bit unfair to those that did pay their debts before 2017 but that is one alternative, clean it up and say ‘going forward this is never going to happen again’.”

“It’s a significant amount of money and it’s the Minister of Finance that would have to exercise the discretion to write that off, but it is one of the alternatives.”

Mr Jordan acknowledged that the ATO’s correspondence regarding the tax debts last year “was not the best example of a project to communicate with people”.

“We have ceased all that correspondence,” he stated.

“We were never asking for the money, it was only if you get a refund, you will now have this small amount going because of this negative finding on our annual accounts.”


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