Independent MP Zoe Daniel is calling for the Australian Taxation Office to show “nuance” when collecting debts, saying traders in her electorate are operating in “survival mode”.
The ‘teal’ crossbencher is also urging Treasurer Jim Chalmers to enact new small business support measures before the next federal election, saying the Treasury can act now to protect entrepreneurs.
On Monday night, Daniel tweeted that businesses in Goldstein, covering Melbourne’s bayside suburbs, “are doing it tough” and that “recovering tax debt mustn’t push them to the brink”.
“I urge Treasury to find a fairer balance to support small business owners in these challenging times,” she added, tagging Treasurer Chalmers.
Speaking to SmartCompany, Daniel said recent doorknocking in her electorate revealed small businesses are deeply concerned about accumulated tax debts.
Daniel said she understands the need for the ATO to collect some $34.4 billion in collectable debt held by small businesses, and that traders understand that need, too.
But in the “economic circumstances that we’re in, there’s no benefit to anyone from shopping strips having empty shopfronts because the ATO has called in debt and the small businesses have to close,” she said.
Daniel said she heard from one cafe owner whose business survived COVID-19 lockdowns but accrued a $70,000 tax debt.
The ATO told the cafe owner they would call in the debt unless they could quickly demonstrate their ability to repay, Daniel said.
The cafe owner then attempted to take out a bank loan, in order to keep the doors open before Christmas.
“That just doesn’t seem like a very good approach to the problem from my point of view, and certainly not from the perspective of that business, but I don’t think from the perspective of our communities, either,” she continued.
“And I think that the ATO and Treasury really should be talking to each other about whether now is the right time to be exerting that kind of pressure on these small businesses.”
Daniel detailed her concerns in a letter to Treasurer Chalmers last week, saying targeted policies from the federal government could support struggling businesses before the next federal election.
The ATO is strengthening its debt collection practices, reversing the hands-off approach it took earlier in the COVID-19 pandemic.
Its use of Director Penalty Notices, which can hold directors personally liable for outstanding business debts, is on the rise.
And tweaks to the interest charged on overdue tax will make it even costlier for businesses to postpone their payments in 2025.
But the tax office says it will work with businesses that confess their debts sooner rather than later, preferring to negotiate payment plans instead of pursuing Director Penalty Notices, court recoveries, and winding-up orders.
Daniel encouraged the ATO to pursue more bespoke payment plans instead of those harsher measures.
“I know they do this to some degree,” she said, but advocated for more “individualised” pathways allowing “small businesses to pay the debt back gradually and also stay afloat, pay their staff, pay their suppliers, and then be able to survive”.
SmartCompany has contacted the ATO for comment.
Looking ahead, Daniel said she is consulting with small businesses in the Goldstein electorate to understand if the instant asset write-off could be improved.
Daniel, who previously supported efforts to expand the write-off, said, “we need to be making life easier, not more difficult, for small business”.
Boosting the write-off could help some businesses recover from the lingering effects of inflation and interest rate hikes, she said.
“You know, they’re in survival mode right now, every small business I speak to in my electorate is in survival mode, and they’re right on the edge,” she said.
Daniel is also considering whether climate guidelines could accompany a reformed instant asset write-off, encouraging small businesses to invest in assets with a lower carbon footprint.
Separately, the independent MP agrees with seven other ‘teal’ crossbenchers that a core legal definition of ‘small business’ should expand from 15 employees to 25, which could excuse more businesses from incoming reforms like the right to disconnect.
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
