What does the Tax Office plan to pursue in the 2024–25 income year? The Australian Tax Office (ATO) has announced that debt collection and taxpayer performance will remain key focuses of its compliance agenda in the corporate plan 2024-25.

In the tax office’s words, “We will also support businesses through our timely provision of tailored advice and guidance, and other contemporary services.”

Key Focus Areas for 2024–25

1. Strengthening Debt Collection

“We will implement our new payment strategy by enhancing our tailored approaches to different client segments and further calibrating our actions in alignment with the client’s capacity to pay and past compliance history. We will have an increased focus on business debt including superannuation guarantee, pay as you go withholding and goods and services tax (GST).

   

We will support clients who are engaged to get them back on track. We will take decisive and swift action with those clients who make the choice not to engage and who purposefully avoid payment obligations. Through our enhanced data and improved analytics capability, we will better identify the drivers for non-payment and refine our strategies to drive on time payment.”

Key Points:

• Increased focus on business debt, including superannuation guarantee, PAYG withholding, and GST.
• Swift action will be taken against those who avoid payment obligations.
• Enhanced data and analytics will be used to identify non-payment drivers and improve strategies for on-time payment.

Key Takeaway:

The key takeaway in the debt focus statement must be engagement. Engagement starts with ensuring that returns are lodged in a timely manner.

Hiding a debt by not lodging serves no useful purpose – all it does is start any potential ATO conversations on the wrong foot as it indicates to the ATO that your business is not interested in working with them.  Note the inclusion of “calibrating our actions in alignment with the client’s capacity to pay and past compliance history”

Conversely, if your lodgements are behind for a valid reason, then ensuring that payments are made in a timely basis will go a long way to assisting with the catch-up program.

2. Enhancing Counter-Fraud Measures and Cybersecurity

This is particularly relevant in the context of the ATO push to the digitalisation of the tax ecosystem.  Whilst the overall number of our clients impacted by cyber security failures is still small, that number is growing and the effect on a client is alarming. 

MyGov access seems to be the most prevalent with fake tax and Activity Statements being lodged to gain access to refunds.  Unfortunately, the downside is not only financial – personal information is compromised including Tax File Numbers.  This means that any future lodgement requires more detailed process and leaves the risk of identity theft open.  The responsibility for data security needs to be taken by all.

2. Blueprinting of a Future Small Business Digitalised Tax Experience

Designed to make it easier for small businesses to meet their tax obligations from the start and on time, initiatives and digitalised, integrated options implemented at broader scale will support small businesses to accurately report and pay at the right time.   In essence, deeper direct live data feeds into the ATO for small business is coming.

ATO Risk Management Strategy

The ATO debt risk is being managed through their core strategies of prevention and engagement with early intervention and firmer and stronger actions. Those core strategies will be enhanced by a Lodge and Pay Reset program, using data and analytics to drive rapid progress in delivering on-time payment and addressing collectable debt. 

Compliance (lodgement) risk will be managed through a 3-tiered approach to understanding tax (non) performance and by starting to set tolerances for tax non-performance.  

For more detailed insights on how these changes might impact your business, read the full article on ATO’s website or contact your accountant at LZR for guidance.