ATO responsible for 7% of company liquidations

THE tax office is winding up and bankrupting thousands of self-employed workers and small businesses instead of restructuring their tax debts.

The Australian Taxation Office admitted it was responsible for 2 per cent of bankruptcies and 7 per cent of all company wind-ups in the last financial year.

Most of the time the ATO will come to some kind of arrangement with a debtor and will often waive interest and penalties – but rarely will they reduce the primary debt.

The ATO admits it does take a hard line on some firms but these firms would have a long history of not paying their tax or a history of broken promises with the ATO in respect of payment of tax.

The tax office doesn’t want to wind up viable companies, but must take action where there is evidence of a business trading while insolvent,” a spokesman from the ATO said.