Collectable debt — that is debt owed by individuals, businesses and super funds to the ATO — has now reached a record $26.6 billion. (AAP: Dan Peled)
The Australian Taxation Office is under pressure to recoup more revenue, with figures showing debt owed by Australians to the tax man has hit record levels.
- The ATO’s annual report shows debts owed to it are rising, with small businesses owing most of the ‘collectable debt’
- In 2018-19, audit activities brought in $15.3 billion, the agency said, while it handed out income tax refunds worth $43.1 billion
- The ATO received almost 20,000 ‘complaints’ from taxpayers that year, and another 26,000 people issued formal ‘objections’ against ATO decisions
On Wednesday, tax commissioner Chris Jordan used parliamentary privilege during Senate Estimates to hit back at what he labelled “sensational” media reporting about the way ATO whistleblowers Richard Boyle and Ron Shamir had been treated after making allegations of misconduct about the office.
After Mr Jordan’s testimony, Greens senator Peter Whish-Wilson requested the secretariat of the Senate Economics Legislation Committee have the senators sitting on the committee consider whether Mr Jordan’s opening statement could be expunged from the Hansard record.
Senator Whish-Wilson requested this happen given information provided by Mr Jordan “went beyond what was public knowledge”, was subject to pending court proceedings, and the individuals named had no immediate right of reply
The committee is considering the request.
Mr Jordan on Wednesday also told Senate Estimates the ATO, which has an operating budget of $3.9 billion, had a debt book that had grown to a record $45 billion.
This included debts owed across all taxpayer categories including collectible debt, insolvency debt and debt subject to objection or appeal, which Mr Jordan said would grow if the tax office did not move to collect money it felt was owed by taxpayers.
Collectable debt — that is debt owed by individuals, businesses and super funds — has now reached a record $26.6 billion, up from almost $24 billion it reported in 2017-18.
Within that figure, the majority of collectable debt is still owed by small business. They owe the ATO about $16.5 billion in debt, up from $15.1 billion the year before.
The total amount for “insolvency debt” was $7.5 billion, while debt “subject to objection or appeal” was $11.3 billion.
The ATO said that last financial year, $1.4 billion of debt was “uneconomical to pursue”, while $2.8 billion was “irrecoverable at law”.
|Debt subject to objection or appeal||$9.9b||$11.3b|
|Uneconomical to pursue||$1.1b||$1.4b|
|Irrecoverable at law||$3.7b||$2.8b|
ATO says audit activities having an impact
In 2018-19, the ATO said it raised $15.3 billion from audit activities alone.
The ATO issued income tax refunds with a total value of $43.1 billion and activity statement refunds worth $64 billion.
Net tax collections in 2018-19 were $426.0 billion, up $29.2 billion (7.4 per cent) over the previous year, and $8.3 billion (2 per cent) above the amount expected at the time of the 2018-19 Budget.
Within this, company tax collections increased by $9.0 billion (10.7 per cent) in 2018-19.
The ATO said the company tax outcome was $4.5 billion above the Budget forecast, “largely reflecting higher-than-expected mining profits due to high commodity prices”.
There were 11.6 million “individuals not in business” in 2018-19.
Total individual tax collections grew by $16.7 billion (8.1 per cent) — $5.7 billion above the Budget forecast, which the ATO said partly reflected higher-than-expected capital gains and dividend income, and lower deductions being claimed.
Superannuation income tax collections increased by (4.3 per cent) and GST collections increased by $2 billion (3.2 per cent), although the GST figure was still $2.2 billion below the Budget forecast, because of weaker-than-expected growth in consumption and dwelling investment.
Excise collections were $0.6 billion (2.6 per cent) higher than 2017-18.
The agency said its renewed focus on work-related expenses, including greater publicity of its review and audit activities, had seen an estimated revenue impact of $560 million over the past two years.
Fight against multinationals, fraud
The ATO’s main group hunting large corporates and multinationals, the Tax Avoidance Taskforce, raised $1.9 billion in liabilities and $1.1 billion in cash collections.
But the ATO had in some cases opted to settle with some large companies that disputed tax bills, rather than fight it out in court.
In the public group and multinational business line, the tax man settled with 98 companies in 2018-19. It had originally hit these companies with $3.5 billion worth of tax bills. But it ended up collecting about $1.9 billion.
In the privately owned and wealthy groups business line, it had 254 settlement cases. It originally hit them with $232 million worth of tax bills, but in the end settled on $124 million.
The agency’s total legal expenditure for 2018-19 increased by $6.4 million (or 7 per cent) when compared to the previous year — the largest increase seen in the cost of briefs to counsel and other professional fees paid.
“This was primarily due to increased volume and complexity of cases including from the Tax Avoidance Taskforce, and other compliance activities,” the ATO said in its report.
In 2018-19, the ATO also conducted its own internal fraud investigations.
It said it assessed 390 allegations or reports, of which 74 were substantiated, 134 were unsubstantiated, 70 were not able to be determined and 112 remained open at the end of the year.
Unauthorised access continued to be the largest category of substantiated allegations, and predominantly involved an employee accessing their own records, those of their family members or other people known to them.
During 2018-19, there were 34 occasions on which information was disclosed to ministers: one occasion to the Treasurer, 13 occasions to the Minister for Revenue and Financial Services and 20 occasions to the Assistant Treasurer.
Taxpayer complaints and objections
The ATO received 19,826 complaints (inclusive of IGTO complaints) in 2018-19, the majority of which related to income tax.
In 2018-19, there were 37.6 million returns lodged, and 530,508 adjustments arising out of audits.
The ATO said greater use of advanced analytics and automation has led to increased review and audit activities for individuals not in business.
Taxpayers can also formally object to ATO decisions. The ATO said it “resolved” more than 26,000 objections, which was a higher number compared to the year before when there were 24,350 objections.
There were 441 applications for review or appeal to the AAT or other courts in 2018-19, with 102 decisions made either in relation to these applications or applications made in earlier years and the rest resolved prior to the court hearing.
Under the Commonwealth’s Scheme for Compensation for Detriment caused by Defective Administration, compensation may be paid to an individual, company or other organisation that has experienced detriment as a result of the ATO’s defective actions or inaction.
ATO payments under the scheme are discretionary, and Senate Estimates was told on Wednesday anyone receiving compensation was typically asked to sign an agreement that they would not discuss the case thereafter.
In 2018-19, the ATO registered 182 compensation cases and finalised 167, with 79 resulting in compensation being offered.
The total amount of compensation payments made in 2018-19 was $2.27 million, the median payment was $193 and the average was $7,496.