Tax

Small businesses owe over $12 billion to the ATO as crackdown continues

Matthew Elmas /

Australian businesses owe $12.3 billion to the taxman, with activity statement debt rising to $12.3 billion in 2017-18, up 8.4% on the prior year, new figures released by the Australian Taxation Office (ATO) show.

Small business debt again accounted for the majority of the $23.7 billion in total collectable debt owed to the ATO, a figure which increased 12.5% in 2017-18.

Much of that debt, $9.7 billion, is subject to objection or appeal though, while $1.1 billion has been deemed “uneconomical to pursue”.

The ATO has been cracking down on tax-dodging multinationals and public businesses, recovering $2.8 billion in tax liabilities through its Tax Avoidance Taskforce in 2017-18.

But the data, released in the ATO’s 2017-18 annual report on Tuesday, shows 287 “privately owned and wealthy groups” were able to collectively claw back 60% of their tax bill.

Disputes pursued by the cohort resulted in a $274 million tax reduction, lowering the ATO’s position from $454.6 million to a settled position of just $180.6 million.

In contrast, the 173 small business settlements delivered $30.7 million in tax reduction, lowering the ATO’s position from $60.6 million to a $30 million settled position.

Overall tax collection exceeded expectations on multiple fronts during the year, including company tax and GST collection.

Net tax collection increased by $37.4 billion to $397 billion in 2017-18, up 10.4% on last year and about $12.5 above expectation.

Company tax collection is up $16.1 billion, which is $6.7 billion ahead of expectation, while GST collection increased by $3.2 billion (5.4%), $0.7 billion above budget.

The ATO interacted with 3.8 million small businesses in 2017-18, saying it has placed a greater focus on SME engagement.

It says it has done this through cash flow and superannuation engagement programs, receiving almost 3,500 requests for private rulings or guidance from small businesses.

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Matthew Elmas

Matthew is the news editor at SmartCompany.

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