Dramatic rise in applications for release of tax debts in first half of financial year
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Figures from the Australian Taxation Office (ATO) show rising levels of unpaid tax debts from in the community as the downturn in the global economy continues to exert pressure on businesses and individuals.
The Taxation Commissioner, Michael D'Ascenzo, said the current environment is placing "substantial pressure" on the ATO's goal of reducing the rate of growth of collectable debt.
The first half of this financial year has seen applications for release of tax debts more than double when compared to the same period last year. In the first half of the 2008-09 financial year, the ATO received more than 1,600 applications for release of tax debts worth $61.9 million - an increase of 61 per cent, D'Ascenzo said in a speech to an Asian tax forum in Sydney this week.
D'Ascenzo said that in the first half of 2008-09, the ATO granted full or partial release in 55 per cent of cases processed. The full releases (927 cases) were worth $23.5 million while partial releases (35 cases) were worth $1.1 million.
The ATO granting full or partial release to tax debts has been a growing trend, ticking up from 33 per cent of cases being granted release in 2005-06.
At 31 January 2009 there were more than 194,000 debt cases under arrangement worth $2.5 billion. Compared with January 2008, this represents an increase of 17 per cent (more than 29,000) in the number of debt cases under arrangement, the Commissioner said. Since January last year there has also been an increase of 15 per cent ($339 million) in the value of debt cases under arrangement.
The ATO is taking a "community first" approach to debt in the current environment. This includes providing flexible payment arrangements for 'viable businesses'.
"Our debt collection strategies are increasingly focusing on early intervention to provide more opportunities to engage with taxpayers and, in many instances, address tax debt earlier in the debt cycle, before it escalates and becomes unmanageable," the Commissioner said.
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