Debt collection is an issue encountered not only by lenders but also the government. It is quite surprising that the government is after these small businesses whereas there are business giants who are obviously not paying the right amount of taxes. They have separate books and their accountants try to manipulate the amount of tax that they are going to pay to make the amount smaller than the actual one. Other businesses experience cash flow issues which become a hindrance for them to pay their taxes.

Debt Collection Under Scrutiny

The government is trying their best to improve debt collection when it comes to taxes. They also have targets to meet. The Australian Taxation Office also encounters this type of problem. They are determined to improve their debt collection methods by using a different approach. Ali Naroozi, the Inspector-General of Taxation, came up with a report that there is a need to supervise junior officers who often make wrong decisions. Based on reports, from the year 2013-2014, the tax debt reached $20 billion and 60% of it which represents the majority of it is owned by small business. This is the reason why they are after small business owners. They may be running a small business but when you combine all of them and the amount of debt, the amount is overwhelming.

Ali Naroozi is determined to improve tax debt collection. His idea of doing things in order is to start from the officers. The staff and officers need to be well trained and provided with formal training to avoid mistakes when it comes to decision making. Previously, junior officers are allowed to make decisions even without the approval from senior officers. Ali Naroozi feels that it is important that junior officers make the right decisions guided by senior officers and avoid having the perception that they can decide on their own and their decisions are always right when they’re not. So basically, Ali Naroozi’s idea is to refine the training methods down the line to make them competent.

Debt collection approach should also be finetuned to make the tax payers engaged and to recover tax debt efficiently. They may use a stronger approach to be able to collect and hire external collecting agencies, or through the use of legal action. Those who experience cash flow problems will be supported to ensure they pay their obligations on time through payment arrangements. It only shows how determined and serious ATO is in order to minimise tax debt and improve debt collection.