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ATO chases small businesses for $34b in debt

ATO chases debt

During the COVID-19 pandemic, the Australian Taxation Office (ATO) suspended chasing over $34 billion in debts owed by small businesses and self-employed individuals. However, as economic conditions worsen, the ATO has resumed aggressive debt collection measures, potentially pushing struggling businesses into insolvency.

Experts anticipate a surge in insolvencies, particularly in sectors like construction, hospitality, and retail. While the ATO's actions aren't always the primary cause of insolvency, their intensified debt recovery efforts, including reporting debts to credit agencies, issuing garnishee notices, and initiating wind-up applications, contribute to the financial strain faced by businesses already struggling in a recessionary economy.

Total collectable debt owed to the ATO jumped to $52.4 billion as of December 31, 2023, roughly double the $26.4 billion at the end of 2019. 

Small business debt accounts for $34.1 billion, or 65 per cent, of total collectable debt.

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