Has the ATO lent a helping hand?

For a regulator whose very name should strike fear in the hearts of tax dodgers everywhere, Tax Commissioner Michael D’Ascenzo comes across as a bit of a pussycat. At least, that’s the impression I had had when I heard him speak at the Council of Small Business of Australia national congress a few weeks ago.

It was the first time I had heard D’Ascenzo speak and I was struck by his softly-spoken, almost gentle style.

But I was also struck by the message he was delivering to SMEs. It was clear that the ATO was only too aware of the pain that many SMEs were experiencing and the Commissioner had a simple message: If you are struggling, come and talk to us and we’ll help you work something out.

“I think a real problem we are facing in the ATO is getting people to come to us when they have difficulties,” the tax chief said.

“We should be the first people [struggling companies] should want to speak to. In most cases, we will be able to help get you over the line.”

Now, it probably wasn’t surprising that D’Ascenzo would present a kind face to Australia’s biggest SME event. But the level of emphasis that D’Ascenzo placed on the ATO’s willingness to help businesses “get over the line” by providing them with some sort of payment arrangement for the tax debts certainly made an impression with me.

The latest insolvency figures suggest D’Ascenzo’s words have been supported by real action in the shape of a much more empathetic approach to SME debts.

Insolvencies plunged 22% in June, which is an extremely unusual result when for the last 11 months insolvencies have risen by an average of 13% year-on-year.

And just as the ATO has been held largely responsible for that increase, by virtue of the fact that it has increased its pursuit of outstanding tax debts, I have a sneaking suspicion that the ATO is largely responsible for the big fall in June.

The ATO isn’t saying very much this morning, but claims its debt collection strategies have not changed. Fair enough, but I still think the Tax Office is to be applauded.

During the GFC, the ATO was without question the most helpful part of government, entering into hundreds of thousands of tax debt payment arrangements that undoubtedly saved many businesses.

While it was understandable that the ATO would eventually start to chase outstanding debts created by these payment arrangements, if the ATO has sniffed the economic breeze and eased back, then that is very much welcome.

To mangle D’Ascenzo’s message a bit, the ATO is doing the right thing – businesses who feel they are in trouble should also do the right thing and go the Tax Office as early as they can.

James Thomson is a former editor of BRW’s Rich 200 and the publisher of SmartCompany and LeadingCompany.