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Recoveriescorp has been engaged by the Tax Office in its first use of a collection agency since the pandemic.
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ATO to sool debt collector on 150,000 taxpayers
06 February 2024
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10 minute read
The ATO will refer up to 150,000 taxpayers to a debt collection agency before the end of June in “decisive and swift” action to recover millions owed by those “with the capacity to pay”.
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In its first post-pandemic use of an external debt agent, it said taxpayers with outstanding income, activity or superannuation amounts – or their accountants – could expect contact from Recoveriescorp that could be verified with a phone call.
The referrals began on 29 January and marked the first time it had employed Recoveriescorp, which was the only debt collection agency being used.
“Over the last few years there has been an increase in collectable tax and super debt,” the tax office said. “We are actively addressing this by taking decisive and swift action with those clients choosing not to engage and who purposefully avoid their payment obligations.”
“Our expectation is that taxpayers with the capacity to pay should do so on time and in full, and there won’t be concessions available for these taxpayers. Don’t wait for the ATO to chase overdue debts.”
“External debt collection agency Recoveriescorp will assist the ATO with addressing the increase in tax and super debt and allow us to engage with more taxpayers to address their liabilities.”
The ATO’s website said it would follow up overdue debt letters with pre-referral warning notices and if a taxpayer failed to respond, that would be the trigger to alert the external debt collection agency.
“If taxpayers haven’t responded to the pre-referral warning letter or engaged with the ATO to repay their debt, they are likely to be referred.”
“Taxpayers with active income tax, activity statements or unpaid super debts may be referred to the external collection agency. The expectation is that between 100,000 to 150,000 referrals will be made to the end of this financial year.”
Overdue debts incurred the general interest charge, currently set at the highest level in more than a decade with an annual rate of 11.38 per cent. Credits, refunds and debts on hold would be used to offset the debt where they were available.
The ATO said help was on hand for those in genuine need.
“The external collection agency will focus on providing support to taxpayers to pay their debt in full, or where they are unable to pay in full, to assist with establishing a tailored payment plan,” it said.
“If a taxpayer is experiencing serious financial hardship or a personal crisis, the ATO can provide additional support.”
The office declined to specify the amount of debt owed by the 150,000 taxpayers or give an indication of its recovery target.
Reviving the use of a debt collection agency adds to the ATO’s armoury that includes director penalty notices and, where a debt exceeds $100,000, referral to a credit ratings agency such as CreditorWatch.
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