Unpaid Tax or SGC – the ATO could come calling

In this year’s federal budget the ATO received extra funding of $125.7 million over four years to work on reducing debt and collecting superannuation guarantee charge debt owed by employers.

At the end of March 2007, collectible debt to the ATO and outstanding employee superannuation contributions totaled $10.1 billion. While internationally Australia’s percentage of collectible tax debt to total tax collections is relatively low, the amount outstanding is still significant.

Last year, the ATO trialled some new initiatives to contact people with a debt and encourage them to work with the ATO to meet their obligations.

Three new approaches were trialled:

• dialer technology
• calling people after business hours
• and referring low-level debts to an external collection agency.

These initiatives have resulted in helping to reduce the growth of collectible tax debt to just over 6 per cent in 2005-06, down from 27 per cent the previous year.

The ATO collected $37 million from the after-hours trial (which only applied to a small sample of taxpayers who had not responded to previous attempts to contact them) and $21 million from the external collection agency trial (which only applied to a small sample of low-level debts).

By far, the most successful of these trials was the use of dialer technology.

This technology was used to automatically work through a list of phone numbers, filtering out busy signals and unanswered numbers. Between May 2006 and March this year, there were 193,000 taxpayer contacts, negotiating 45,000 promises to pay, totaling $1 billion.

The funding received in this year’s Federal Budget will be used to expand the debt collection capability to incorporate the use of dialer technology and debt referral.
Around $42 million over four years will be spent to fund external collection agencies to collect a selection of tax debts on our behalf.

Approximately $16 million over four years will be spent to expand the dialer technology work through infrastructure development and additional licenses to increase calling capacity.

A further $40 million will be spent over four years to recover aged tax debt.

In cases where the tax or superannuation systems are being abused, firmer action will be taken.

The ATO will be concentrating on the level of superannuation guarantee charge debt owed by employers that have failed to make these payments on behalf of their employees.

Employers who do not properly pay their superannuation guarantee obligations are using their employees’ money. It gives them an unfair competitive advantage over other businesses and it is unfair to their employees who run the risk of losing their retirement income.

If you are concerned about any outstanding tax debt or late superannuation payments please contact this office.