Supporting people experiencing financial difficulties

We maintained our empathetic approach to viable small businesses and individuals experiencing short-term difficulties.

In 2010-11 we:

  • granted 5,774 activity statement payment deferrals
  • granted full or partial release from payment in 3,315 cases to the value of $78 million.

At 30 June 2011, we had in place 41,830 interest-free payment arrangements with a value of $547 million.

Assessing business viability

The viability of a business is a key consideration in our decisions on collection actions and payment arrangements. We developed a business viability tool, used by our debt collection officers when they assess the ability of a business to meet payment arrangements and future tax obligations. To increase community awareness and understanding of our approach, we will publish the business viability assessment tool on our website during 2012.

We are also piloting the use of professional firms to conduct independent business viability assessments for businesses with complex financial arrangements and significant outstanding tax debt.

Enhancements to our collection strategies underpinned our debt collection performance in 2010-11. These enhancements included:

  • improved structuring of debt payment arrangements to align with a taxpayer's individual circumstances
  • an increased focus on business viability to ensure taxpayer capacity to adhere to a payment arrangement and meet ongoing obligations.

Community helps with our decisions

To ensure the quality of our decision making, we regularly review the way we manage debt cases. Workshops involving members of the community are a key component of our quality assurance process.

At these workshops, held four times a year, a panel reviews a sample of cases to determine if we are making appropriate decisions. Community representatives have been supportive of the workshops and impressed by our commitment to taking on broad constructive feedback.

The ATO staff certainly seemed interested on how the community views the debt recovery process and the ATO in general. I felt that there was a genuine appreciation of the comments and suggestions from the community representatives.

Through this process I have gained an enhanced understanding of the number of debt recovery cases the ATO has to handle. While the numbers may be daunting, the ATO appears to still keep in mind they are dealing with real people with real circumstances.

I found it to be a very worthwhile and interesting experience.

Melissa Hourigan - Chartered Accountant

We continued to balance our support for taxpayers with firmer action where taxpayers chose not to work with us to address their obligations or did not have the means to meet their payment obligations.

The increase in insolvency debt reflects the ongoing effects of the economic downturn.

TABLE 4.21: Total bankruptcies and wind-ups, including those initiated by the ATO, 2009-10 to 2010-11





Bankruptcies (a)

ATO-initiated bankruptcies




Total bankruptcies




Wind-ups (b)

ATO-initiated wind-ups




Total wind-ups




(a) Information provided by Insolvency and Trustee Service Australia. Figures for 2009-10 are confirmed. Figures for 2010-11 are provisional and current at 15 September 2011. ITSA may revise these figures at a later date.

(b) Information provided by Australian Securities and Investment Commission (ASIC). Figures are current at 2 September 2011. ASIC may revise these figures at a later date.

We initiated 2% of total bankruptcies and 11% of total wind-ups.

Since 2004, we have engaged external consultants to conduct regular independent reviews of our management of cases where taxpayers have been declared insolvent. The reviews indicate that our actions have not led to premature bankruptcy or wind-up. Recent reviews are available on our website.

Key performance indicator

Progress new services that support service delivery




Successfully administered the distribution of tax bonus payments

Successfully deployed the new integrated core processing system

Delivering Tax Time 2010 with our new income tax system

We used our disaster response framework to provide a coordinated approach to support staff, people, businesses and tax agents affected by natural disasters

    Last modified: 31 Oct 2011QC 28036