Don’t let an old debt catch up with you

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The Australian Tax Office has told small businesses that it will now seek to recover even small debts it had previously put on hold, according to a national accountancy publication.

Accountants Daily says the ATO has written to 28,000 tax agents to warn that it will offset clients’ tax refunds or credits against debts on hold that had been written off as “uneconomic” to recover.

Tax agents say many of the debt recovery efforts will date back decades, be directed to deceased taxpayers or defunct businesses, and are a waste of time and money to reconcile.

The publication quoted an accountant as saying: “The ATO told me I’ve got someone who owes 33c, someone who owes 55c, two people who owe 5c. So out of 20, I’ve got four that are less than a dollar.”

Under the relevant Act, the ATO puts debts on hold when the amount is “uneconomical to pursue” but may revive it if it thinks a taxpayer’s circumstances have changed. There is no statute of limitations.