According to the Australian Taxation Office (ATO), “the total level of collectible debt as of June 30 was $19.2 billion”.  Small businesses, which make up about 65% of these debts are now being targeted in an effort to recoup  some of the unpaid billions.  In an effort to push more small firms to pay up, tax debt information will now be disclosed to credit agencies if a business has “tax debts of more than $10,000 that are at least 90 days overdue.”  In addition, in an effort to ease small businesses into paying their debts, the ATO is giving companies a chance to connect with them before the new law goes mainstream. In the past the ATO had allowed businesses to accumulate over $345,000 before taking legal action.

The new law is gaining support even from the Council of Small Business Australia. The big reason is the allowance of smaller firms to engage the ATO early to sort out unpaid tax debts. The change in the ATO’s tone is coming after the agency has been criticized in recent years for being overly harsh.  According to The Age, a 2014 parliamentary inquiry found that many small businesses “had been intimidated, made bankrupt and suffered mental breakdowns and contemplated suicide after drawn-out disputes with the tax office.”

 After accepting feedback from small business owners, the ATO is now taking a new avenue to recoup debts, actively working with firms and seeking ways to avoide the ultimate need of directly garnish wages and reporting to credit agencies about unpaid taxes.