Submission: ATO management of small business taxpayer debt

ARITA has made a submission providing input into the Australian National Audit Office’s assessment of the ATO’s management of small business taxpayer debt.

Key issues raised in the submission are:

1. Concerns raised by from members regarding the ATO’s approach to SBR’s
2. A recommendation for the introduction of a statutory limitation period within which the ATO must elect to issue and/or pursue a lock-down DPN.
3. A reiteration of points raised in previous submissions and public commentary, namely that:

• ATO debt plans can overlook insolvency risks, while harsh recovery actions may trigger repeated defaults or eventual insolvency and cut creditor returns. Reporting delays distort credit markets, and risk models do not fully address related-entity and phoenix behaviour.
• The management of small business debt is fragmented, lacks transparent performance metrics, and struggles to balance taxpayer support with disciplined recovery and creditor fairness.
• The ATO’s approach lacks consistent calibration and oversight, is applied unevenly across offices, and underutilises early behavioural interventions that could reduce defaults.
• ATO actions can hinder returns for other creditors or interfere with restructurings. Prioritising large-value debts risks neglecting the broad base of small business debts, which carry a significant systemic impact.

Read ARITA’s full submission