Extend the power of the AAT to pause or modify ATO debt recovery action

The Government is seeking stakeholder views on exposure draft legislation that increases the rights of small businesses to contest the ATO’s collection of disputed tax debts.

In the 2021‑22 Budget the Government announced that it would extend the power of the Administrative Appeals Tribunal (AAT) to pause or modify ATO debt recovery action in relation to disputed tax assessments under review by the Small Business Taxation Division (SBTD) of the AAT.

The exposure draft legislation amends the Taxation Administration Act 1953 to:

• allow the AAT to make orders that stay or modify the Commissioner of Taxation’s debt recovery actions in relation to tax assessments under dispute in the Small Business Tax Division of the AAT,
• enable small businesses (i.e. businesses with an aggregated annual turnover of less than $10 million) to seek AAT orders that prevent the Commissioner from taking debt recovery actions, like commencing winding up proceedings or issuing garnishee notices, until the underlying dispute is resolved, and
• empower the AAT to order the Commissioner of Taxation to offer instalment arrangements including 50/50 payment arrangements and to accept security in lieu of immediate recovery.

Further details on the draft legislation are contained in the explanatory memorandum.