|ATO wind-up activity persists|
at record levels.
Chart courtesy Insolvency Notices
As the attached chart indicates, wind-up applications filed by the Australian Taxation Office (ATO) came in at around 400 in July, lower than the previous two months but still well above the long term monthly average of 92. Not that this should surprise anybody given the crackdown was flagged by the tax commissioner, Chris Jordan back in May, when a record 556 wind-up applications were lodged.
"While the majority of taxpayers voluntarily pay their taxes on time or soon after, collecting outstanding taxes is an ongoing challenge for us. Despite our increased efforts, the amount of debt we have to collect has continued to rise in recent years," Jordan said in a speech to the Tax Institute on May 19, 2015.
"We will be taking legal action earlier when warranted, initiating bankruptcy and wind-up action where there is evidence that a taxpayer is insolvent, and looking to use other statutory powers where businesses have failed to pay employee superannuation entitlements or pay amounts held in trust," he said.
Jordan's comments were backed up by deputy-commissioner Cheryl-Lea Field, who said that about half of the companies subjected to an ATO-initiated wind-up notice would proceed to liquidation. And each month since has confirmed that tax debt recovery activity is persisting at historically elevated levels.
After the surge in wind-ups lodged in May - which coincided with a supposedly pro-SME Federal budget - the June number dipped to around 450. But when added to July's numbers they reveal that the ATO has initiated around 1,400 proceedings against SMEs in three months. By comparison it lodged 1,333 winding up applications for the entire year in 2013/14. August meanwhile is on track to record another 400-plus figure.
Given SMEs account for around 60 per cent of the more than $20 billion in collectable tax debt, it might take the ATO some time to make a dent in the arrears, even at 400 per month. That said, a Federal election is due no later than January, 2017, so this more vigorous and comminatory ATO may well assume an altogether gentler demeanour over the next 17 months. 400 per month may in time appear an aberration. Only the opinion polls know.
|Chart courtesy Insolvency Notices|