Do you have an old ATO debt?

About 300,000 Australians are facing the possibility of receiving smaller-than-expected tax returns, with some even having their returns completely wiped out. This situation has arisen due to the Australian Taxation Office (ATO) reactivating debts that were previously put on hold.

This development coincides with the elimination of the Low and middle income earner tax offset from 1 July 2022. These changes come at a time when Australian households have been grappling with a prolonged cost of living crisis.

The ATO has the authority to recover the old debts by automatically taking it from an individual's tax refund.

The old debts were previously put on hold when Australians were dealing with the 2020 Black Summer bushfires and then the COVID-19 pandemic. The ATO sneakily reinstated the debts mid 2022, with many taxpayers only now discovering them when preparing their 2023 income tax returns.

Some taxpayers might not remember that they have a tax debt, as some time has passed since they were put on hold. The ATO has confirmed it is taking action to offset any credits and refunds against these debts - it is estimated that the value of the debts as at 30 June 2022 was $1.2 billion.

If you would like to discuss your tax situation and find out why you have an old debt, contact our office.

Source: https://www.sbs.com.au/news/article/are-you-one-of-the-almost-300-000-why-your-tax-refund-might-disappear-this-year/chsljwwdc