Tax debts continue to increase

In a measure of credit demand unsatisfied by the banking sector, the level of collectable debt owed to the Australian Taxation Office is rising at accelerating rates.

Collectable debt owed to the ATO stood at A$19.5 billion at June 2014

In its annual report, the Australian Taxation Office said "the ratio of collectable debt to net tax collections increased to 6.1 per cent at June 2014, from 5.7 per cent at June 2013."

 
"The value of collectable debt at the end of June 2014 was almost ten per cent [more] compared [with] the end of June 2013.

"This was despite collections attributable to our debt collection actions increasing by 4.8 per cent in 2013/14 compared to 2012/13," the ATO said.

"Challenges in the economy are continuing to affect some taxpayers' ability to pay," the ATO said.

"In 2013-14, the inflow of new debt continued to outpace improvements in our debt management performance, resulting in an increase in collectable debt holdings."

The ATO said: "while our debt management efficiency continued to improve in 2013/14 and total debt collection increased, the inflow of new debt increased by 10.6 per cent compared to the previous year."

Small businesses continue to account for the majority (around 62.4 per cent) of all collectable debt and is a specific area of focus, the ATO said.

 Small businesses are giving a lower priority to tax debts than to trade debts.

Last year the ATO "determined debts worth $3.4 billion to be either irrecoverable at law or uneconomic to pursue," with most due to bankruptcy or company wind-up.