The supply of on-demand credit from the Australian Taxation Office continues to grow quickly.What the ATO calls "collectable debt" owed by households and businesses increased by 18 per cent, to $16.6 billion, in the year to June 2012. The ATO's "total debt holdings" increased 16 per cent over the year, to $31.7 billion.Debt that was two years or older represented 16 per cent of the debt owed to the ATO.Changes in the level of tax debt owed to the Tax Office are of interest as a measure of payment stress among households and businesses.The rate of the rise in credit dependence on the ATO by taxpayers is much faster than the supply of credit from the private sector. This was four per cent over the year to June 2012 and has fallen further since.The ATO said in its 2012 annual report, which was released yesterday, that the rise in the ratio of collectable debt to total cash collections, which has risen to 5.5 per cent from 5.2 per cent, "reflected the cash flow impacts of the challenging economic environment.""We are seeing a decline in on-time payment and an increase in collectable debt, particularly with micro enterprises."It said that at June 2012 there were around 280,000 payment arrangements in place worth $3.8 billion.