The ATO is currently trying to claw back $50 billion in unpaid taxes, with nearly two thirds owed by small businesses. (Source: ATO/Newswire)
The Australian Taxation Office (ATO) has indicated it will take a “practical and proportionate” approach to clawing back unpaid tax debt during the fuel crisis. Small business groups have warned surging costs are adding to the pressure facing small businesses and have called for a more lenient approach to debt collection.
The war in the Middle East has sent fuel prices skyrocketing across Australia, with the impact being felt across the economy. Many small businesses are feeling the brunt of rising fuel costs and uncertainty around supply.
The ATO has more than $50 billion in unpaid debt it is trying to claw back, with nearly two-thirds belonging to small businesses. The tax office has ramped up its repayment efforts after temporarily pausing its recovery action during the pandemic.
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But now, it says it will be responsive to the current fuel crisis.
“The business community, including small businesses, can be assured that the ATO will take a practical and proportionate approach to administering the taxation law,” a spokesperson told The Australian Financial Review.
“The ATO understands some small businesses may be facing challenges associated with rising fuel costs and uncertainty around supply.
“Where a business is genuinely experiencing cash flow difficulties, we encourage them to contact their bank or credit provider, speak to us, or speak with their registered tax professional early.”
The Council of Small Business Organisations Australia (COSBOA) has been calling on the ATO, along with banks, to take a more proportionate approach to help ensure small businesses can maintain cashflow.
COSBOA CEO Skye Cappuccio said for businesses operating on tight margins, even small increases in fuel costs could have a direct impact on cashflow and day-to-day operations.
“For tradies, delivery operators, farmers and regional retailers, fuel is not discretionary. It is a daily cost of doing business,” she said.
“When fuel prices rise, those costs flow directly into transport, logistics and service delivery, and, where they can, through to customers.”
Cappuccio said fuel was just “one part of a bigger picture”, with small businesses already managing rising energy, insurance, wage and compliance costs. It’s been warned that this could push many small businesses to breaking point.
It comes as the Australian Restaurant and Cafe Association calls on cafes, restaurants, pubs and other venues to introduce a temporary 1 to 5 per cent fuel levy surcharge for diners to combat surging fuel prices.
The RBA’s latest Financial Stability Review found company insolvencies have stabilised over the past year, but remain elevated in some industries such as hospitality and construction.
However, it warned there was growing pressure on small businesses managing unpaid tax debt as enforcement actions resume.
“Consistent with this, the share of insolvent firms with large debts owing to the ATO has increased notably over the past three years,” it said.
There were 9,618 insolvencies for the 2025-26 income year to March 8. That included 2,324 company insolvencies in the construction industry and 1,432 in the hospitality industry.
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