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Payne likened the debt recovery effort to robo-debt in the way the communication came as a shock to taxpayers. “Because there was a void of information about what can you do and where can you go for help, people will fill that void with their own catastrophes,” she said.
The ATO resumed chasing uneconomical-to-pursue debts after a 2023 report by the Australian National Audit Office (ANAO) recommended the tax office ensure its compliance with legal requirements to offset debts with credits or refunds.
However, the tax office was warned in a stewardship meeting in February 2023 attended by tax associations, accountants and tax agents about the sensitivity of communicating these debts and to wait until all debts were visible on the portal before issuing notices.
“[The ATO] was cautioned against doing a bulk communication mail-out … some people are getting letters saying, ‘You owe 20 cents’,” said Payne.
“Of course, the ATO is entitled to do whatever it likes. So, they did the bulk mail-out … That’s when their troubles truly started.”
Incoming Tax Commissioner Rob Heferen at a summit in Sydney in 2015.Credit: Ryan Stuart
In a speech to the National Press Club in February, outgoing tax commissioner Chris Jordan said the ATO had been reluctant to chase very small debts, but had to comply with ANAO’s directions, and said the Finance Minister had the discretion to write off uneconomical-to-pursue debts. “That is one of the alternatives – clean it up and say, going forward, this is not going to happen again,” Jordan said.
“But it would be a significant amount of money, and it is the minister for finance that would have to exercise their discretion to write that off. But it is one of alternatives we’re looking at.”
The ATO’s most recent annual report found $1.3 billion in uneconomical-to-pursue debts. But this category did not include “collectable but undisputed debts”. Payne’s departments, the IGT and the Taxation Ombudsman, manually calculated this sum, which amounted to $8.8 billion over six years.
Payne has spoken to newly minted ATO commissioner Rob Heferen about the botched communications. “I think it would only be fair to give him time to get his head around what’s gone on, and indeed how they should respond to it appropriately,” she said.