The Australian Taxation Office (ATO) is pledging an “increased focus” on lingering business debts while preparing a new, multi-year program to improve small business tax performance.
The ATO on Tuesday unveiled its 2024-2025 corporate plan, the first handed down by Commissioner of Taxation Rob Heferen since taking over from long-serving Commissioner Chris Jordan in March.
It sheds light on how an ATO under Heferen intends to operate, and what the tax office considers to be its key priorities in the year ahead.
Much of the plan is similar to those handed down in past years, which shows the legacy left by previous Commissioners, Heferen yesterday told ATO staff in Canberra.
That includes a focus on business tax performance, in an attempt to whittle down the roughly $32.5 billion in collectable debt held by small businesses as of April this year.
The “continued strengthening of debt collection” is one of six priority areas for the ATO in 2024-2025, the report says.
Going into more detail, the plan says its new payment strategy will use “tailored approaches to different client segments”, taking note of a “client’s capacity to pay and past compliance history”.
That is a clarion call to the small business sector, with the next part of the plan underscoring exactly what the ATO is focused on.
“We will have an increased focus on business debt including superannuation guarantee, pay-as-you-go withholding and goods and services tax (GST)”, it said.
Beyond the corporate report, small business taxpayers are already keenly aware of how the ATO is approaching its debt collection duties.
Director penalty notices, which threaten to make company directors liable for a business’ tax debts, are on the rise, and the ATO is disclosing major outstanding debts to credit reporting agencies.
The new corporate plan suggests the return to standard compliance activities in the final stages of Jordan’s tenure is unlikely to stop any time soon.
“We will take decisive and swift action with those clients who make the choice not to engage and who purposefully avoid payment obligations,” the new plan said.
“Through our enhanced data and improved analytics capability, we will better identify the drivers for non-payment and refine our strategies to drive on-time payment.”
What is new is the ATO’s upcoming approach to helping small businesses comply with their obligations before those debts even arrive.
“Blueprinting a future small business digitalised tax experience” is also on the ATO’s six-point priority list.
“We will continue to consult with key partners and publish a multi-year approach designed to make it easier for small businesses to meet their tax obligations from the start and on time,” it said.
“Our co-designed initiatives and digitalised, integrated options implemented at broader scale will support small businesses accurately report, and pay at the right time.”
It is vital the ATO’s digital services “make it easy for taxpayers to engage with us and that we enable streamlined services so they ‘just happen’,” the report added.
That pledge echoes one of the last statements made by Jordan in his tenure as commissioner, when he asked taxpayers to imagine a “BAS-free future”.
The precise shape and timing of the ATO’s blueprint is yet to be seen, but the ATO plan suggests it sees instantaneous and digital tax reporting as a bulwark against poor tax performance.
The corporate plan also appears to address the recent on-hold debt fracas, by reiterating the ATO’s need to meet community expectations.
It will work with “integrity, fairness and compassion,” the plan said.
“We aim to deliver on our responsibilities in a way that meets community expectations and is in accordance with the law.”
Crucially for the ATO, incoming legislation will remove its requirement to recoup particularly old and minor debts, allowing it to focus on more significant payments.
Elsewhere, the plan recommits the ATO to the responsible use of artificial intelligence in its activities.
“We are committed to ensuring responsible process automation and AI development,” said the ATO, which already deploys some AI activities to identify suspected superannuation guarantee underpayments.
“We seek to lead the way in setting ethical standards, governance arrangements and clear accountability for responsible data collection, management, sharing and use.”
All told, the plan attempts to strike the balance between guidance and support, versus the need to recoup billions in outstanding payments attributed to the nation’s small business taxpayers.
“We need to do what we say we will do and not do what we say we won’t,” Heferen said in the plan’s foreword.
“To maintain high levels of integrity within the system, we will provide tailored education and advice, and target those who promote or facilitate deliberate and persistent non-compliance.”
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
