ATO job cuts could spell bad news for SMEs with wind-ups at record highs

Further job cuts at the Australian Taxation Office could result in more small businesses being wound up, according to a Sydney insolvency practitioner.

Last month the ATO applied to wind up 396 businesses, a figure which has been described as small business “carnage”.

At the same time the ATO is on track to remove one third of its staff who work in middle management over the next two years, Fairfax reports.

Jamieson Louttit, partner at Jamieson Louttit & Associates, told SmartCompany the ongoing job cuts at the ATO are concerning from a small business perspective.

“Ultimately, if you have less staff you have less ability to manage the recovery process,” Louttit says.

“This means there is less time to deal with the customers and, ultimately, it leads to more insolvencies because then they still need revenue.

“The simplest and easiest way is to wind up small companies and business. At the present time there’s $20 billion that is outstanding from small business – if they’re [the ATO] reducing the numbers [of employees], how do they propose to collect the debt?”

Louttit says small business insolvency numbers are “getting quite large” and at this rate they are not going to ease any time soon.

“This is the fourth month in a row where there is a record high of insolvencies,” he says.

“If they’re going to reduce the staffing levels, then there is a substantial deterioration of skill-base and potentially collections. We’re predicting potentially over 700 [businesses] are winding up this month.”

In a statement issued to SmartCompany, a spokesperson for the ATO said the tax office is confident the job cuts will not negatively impact small business. 

“Our workforce rebalancing efforts at the executive levels are designed to remove unnecessary layers of management and broaden spans of control to ensure we have the right mix of capabilities and organisational structures in place going forward,” the spokesperson says.

“We are confident our remaining workforce is flexible, skilled and responsive and that our priority areas, including our small business area are properly resourced.”

The number of wind-up applications filed over the past four months is the highest on record for that period of time, according to data from Jamieson Louttit & Associates.