Thousands of tax debt defaults ‘in the pipeline’
The Covid-19 honeymoon period is over!
Thousands of tax default referrals worth millions of dollars to the Australian Taxation Office (ATO) are expected before the end of the year, according to the only credit bureau currently processing them – Creditor Watch.
This means beginning to publicly list defaults – something they haven’t done in the past!
Warnings have been issued by the ATO that they have ramped up disclosures of taxpayers owing $100,000 or more after starting the process a month ago.
Over 50,000 letters were sent directly to Directors of Companies threatening default and issuing of Director Penalty Notices. The ATO bypassed tax agents and sent them directly to each individuals residential address.
Creditor Watch have said that such instances of the taxpayers involved were more than 90 days overdue, had no engagement with the ATO and while $100,000 was the threshold for reporting, some of the amounts owing were sizeable.
The ATO are aware that an avalanche of administrations might undermine business confidence but it has warned that the referral process to Creditor Watch, which was temporarily shelved due to the pandemic, had only just begun.
It is important that if you do have an ATO debt – whether its Income Tax, GST, PAYG or Superannuation, contact our office as soon as possible. If you’re engaging with the ATO or on a payment plan with them, you won’t have a tax default against the company, but if you bury your head in the sand and ignore all calls and messages and letters and emails, then eventually that tax default will be lodged.
We can work with the ATO on your behalf to ensure a smooth repayment program and make sure your privacy is protected.
Delivery of ATO information
With the continual increase in cyber attacks in Australia, we are continually working with the ATO and the Tax Practitioners Board (TPB) to ensure your personal information is secure.
Recently we introduced a new way of sending personal information to you that we receive on your behalf from the ATO.
All future ATO correspondence, will be issued via a separate email address which will include an SMS password so that you can access and view the correspondence.
These changes have been made to increase the security around your personal information.
While it may seem a strange email – these changes are important, and we confirm that the separate email you will receive is from us and can be trusted.
If you do not receive it, you may want to check your junk mail folder in case it gets caught in there.
It is also important that you engage with your myGov account – the ATO use this portal to issue correspondence such as Notice of Assessments and other tax related correspondence. Some of this information does not get sent through our office so we want to ensure you do not miss such correspondence.
Example of email correspondence:
Confirmation of Refunds being communicated via Text messaging
Whilst we are your Tax Agent, the ATO are now at times sending direct SMS messages to taxpayers advising them their tax refunds are due to be paid. This is to ensure you have recently lodged your return and are expecting a refund.
If you receive a message but have not recently lodged your return, contact us immediately.
The ATO are seeing tax returns being lodged illegally by scammers with refunds diverted to mysterious bank accounts, and therefore putting in further steps to ensure clarification.
Example of SMS Correspondence:
Larger Tax Refund delays and possible audits
In line with the above, the ATO are also reviewing larger individual tax refunds (especially those over $10,000, and therefore taking longer to process payment to taxpayers).
We are also seeing an increase in audit activity in this space for individuals, and through no fault of their own, clients are put under an ATO audit process.
Fortunately, some clients have taken out audit insurance and we have been able to deal with the ATO on their behalf, at no cost.
For further information on how audit insurance works, please contact Rebecca West at the office.