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Changes to ATO’s rights to enforce and recover tax debts

July 10, 2015 By Fredman & Gopalan Solicitors

Tax timeWith tax season upon us all, it is important to keep up-to-date with changes in taxation law that can affect businesses and individuals, particularly in regards to the powers of the Australian Tax Office in recovering taxes that have not been lodged, changes in the ATO issuing garnishee notices, and other debt recovery issues that may more significantly impact people and businesses than in previous years.

Mr. Chris Jordon, Australian Tax Commissioner, emphasises the importance of paying tax and superannuation to enable Australian society and the economy to continue to thrive. Importantly, in his recent address at the Taxation Institute Convention, Mr. Jordon announced that the thresholds at which the Australian Taxation office could commence legal proceedings against debtors had been changed from $300 000 to $35 000 for individuals, and $340 000 to $93 0000 for businesses. This is a hugely significant drop in the level at which people and businesses can remain in debt to the Australian Tax Office before legal action is commenced, and will undoubtedly affect many Australians that may in previous years have ‘slipped through the cracks’ and not been pursued by the Australian Tax Office and related legal entities.

These changes suggest that the ATO is taking the recovery of taxes very seriously. Importantly, the ATO’s increased rights to issue garnishee notices and have them prioritised over any liquidator, or any other charges against the individual or company, will detrimentally affect the ability of businesses to reduce debts to other parties, and again, affect many more individuals and businesses than in previous years.

For these reasons, it is important to be aware of changes to taxation law and to seek professional legal advice should a debt recovery order be issued by the ATO, or any other liquidator; please do not hesitate to contact Freedman and Gopalan Solicitors on 02 8917 8700.

Filed Under: News

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