Thousands of Australian businesses have failed in the past six months after defaulting on massive tax debts, according to new data from credit reporting bureau CreditorWatch.
Of the ATO tax debt defaults reported to CreditorWatch, over 34 per cent have become insolvent or closed down.
The ATO discloses tax debt to credit reporters like CreditorWatch when a business has a tax debt of over $100,000 and is more than 90 days in arrears.
SMEs are the largest cohort of businesses with tax debt defaults, owing the ATO a formidable $34 billion.
“I truly sympathise with the situation that these businesses are in, with such a huge amount of tax owing,” said CreditorWatch CEO Patrick Coghlan, who is pictured above.
“A tax debt of $100k or more is a huge drag on a business, particularly SMEs, which make up the largest cohort of businesses with tax debt defaults.”
Post-pandemic debt crackdown
The ATO has reportedly ramped up its debt collection activities as it stares down $52 billion in unpaid tax.
The substantial outstanding debt “blew out” during the pandemic, according to CreditorWatch. In this period, the ATO took a softer approach to debt enforcement.
The tax office is now taking a variety of measures against indebted businesses, including business tax debt disclosures to credit reporting bureaus, garnishee orders and Director Penalty Notices.
