ATO Crackdown on Debt

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Insights From MCA Accountants

ATO Crackdown on Debt


If you had to guess how much is owed to the ATO by Australians, what figure would you put on it? Millions, hundreds of millions, billions?

The figure is over $50 billion.

This amount has increased by 89% over the past 4 years, following the ATO’s softened stance on debts through COVID. The ATO (and probably more likely the Government), has decided that the time for the softly-softly approach is over and there will be less “carrot” and more “stick”.

Essentially, the ATO’s view is that it is not a bank, and treating it as an optional debt or the last debt you pay will no longer fly. Those that treat the ATO this way will find themselves in an uncomfortable position and the ATO have publicly said “there will be exists”, meaning they fully expect to bankrupt individuals and businesses as they try to collect this debt.

Scary thought, but when you think about what good an extra $50 billion in the kitty could do for the country, you have to admit that there is merit in what the ATO is doing.

Our information is that the ATO will be undertaking the following in the near future:

  • Payment plans in general being harder to obtain. The ATO expects you to get finance from a bank, and if the bank won’t, you may be expected to sell up your assets;
  • Shorter payment plans (if you are able to get one);
  • No-interest or low-interest payments plans will disappear, as well as the remission of interest (i.e. ATO debts will cost you the full 10% interest per annum);
  • The practice of issuing garnishee notices (i.e. serving a legal notice on your bank, forcing them to essentially hand over your money to them) will resume;
  • The practice of issuing Director Penalty Notices )that make Directors of companies personally liable for company debts) will resume; and
  • Business with unpaid super will be made an example of (parphrased from ATO communications).


Our first suggestion would be to call the ATO ASAP and arrange a payment arrangement. As they crack down more and more, payment arrangements will be harder and harder to get – so getting in early will give you the best chance of getting good terms.

Secondly, chat to your bank. Why pay the ATO 10% interest when you can pay the bank 6% or 7%?

Thirdly, see if you can find a way to simply pay your ATO debt. It may mean selling that rental property, re-mortaging your home, or disposing of equipment that you rarely need – but getting this debt off your books would be something worth considering.


Not sure if you owe the ATO money (or how much), we have a video walkthrough on how to use your MyGov account, or business online services account to see what you owe.

Simply log in to your online services account, find the accounts menu, and your various ATO account will display with the current balance of each account.

Open each account to see what transactions are contained (i.e. what tax debts there are), and payment details can be found there also.


The easy answer is pay the ATO when it is due. But there are many reasons why you can’t, some avoidable and some unavoidable.

We find that many individuals are being charged quarterly PAYG Instalements and they simply aren’t aware. A few years ago the ATO stopped posting these notices and instead just publish them in your MyGov account and expect you to find them. We’d love to say we have a solution to that, but realistically the only solution is to periodically check your ATO account to see if you are being sent these. We would suggest checking at the end of each quarter (March, June, September, December).

Businesses often get behind on ATO debts because they don’t plan for them and don’t put money aside as they go. Remember, 10% of all sales is GST, every payday, there is an obligation to pay the ATO PAYG Withholding (and super to employees). Let’s not forget income tax on profits too.

We have a simple but effective spreadsheet that will help you work out how much tax and super your business is liable for each year, so you can then put in place a plan to put $x per week or month aside so that they money is there when your BAS and tax return come around.

As they say, failing to plan is planning to fail.

It’s incredible the power of simple budgeting and planning. We have seen time-and-time again businesses make huge turnarounds simply by implementing a simple budget and a little self-disclipline. It’s amazing how far businesses can transform from being always behind on payments to getting in front with some simple tweaks.

If you are always chasing your tail, we suggest sitting down with your trusted advisor and seeing what strategies you can put in place.


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