The Australian Taxation Office’s outgoing commissioner says a decision to wipe more than $15bn in decades-old debts affecting up to 1.8 million taxpayers is in the Albanese government’s hands.
Guardian Australia revealed on Tuesday the ATO has plans to expand a controversial scheme – dubbed robotax – to recoup more than $15bn in old debts from older Australians and low-income earners, marked to be scraped from tax refunds.
Exemptions had previously filtered out debts from being pursued if they were very old, small, or the taxpayer was aged over 70 years or earning a taxable income of less than $50,000, ATO documents released under freedom of information showed.
The Albanese government has maintained the program is a matter for the ATO. The ATO recently paused the program to extract older debts from tax refunds amid community backlash. The amounts are still owing and have not been cancelled.
Chris Jordan, whose term ends this month after a decade in the role of tax commissioner, said on Wednesday the tax office had been reluctant to start pursuing the smaller and older debts because it “didn’t make sense”.
But shortly after debt collection resumed during a brief pause at the height of the pandemic, the Australian National Audit Office told the tax office it needed to pursue the debts in order to be compliant with the law, Jordan said.
“We cannot spend the money to chase 5 cents, $2. It’s ridiculous. And they gave us a negative finding on our accounts and said, we are not conforming with the law,” Jordan told the National Press Club.
“As a regulator, we can’t purposely not conform with the law,” he said. “We have to. So, we’re working our way through [it] … we didn’t want to do it.”
Asked why the ATO didn’t ask the federal government to wipe the debts – a possible avenue for the tax office – Jordan said it seemed a “bit unfair” to those who had already paid their tax back but said it still remained an option.
“That is one of the alternatives – clean it up and say, going forward, this is the not going to happen again,” Jordan said.
“But it would be a significant amount of money and it is the minister for finance that would have to exercise their discretion to write that off. But it is one of alternatives we’re looking at.”
Guardian Australia has contacted the office of the finance minister, Katy Gallagher, for a response.
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In correspondence with the government released to Guardian Australia, the ATO considered but ultimately elected not to seek a reprieve for older Australians and those on low incomes from the program, with its reasoning including that clients could “directly seek a waiver from the minister of finance”.
The program has drawn comparison to the flawed robodebt compliance program that relied on automated processes. The new initiative has been described as “brutal” by taxpayers, including those who say they do not know how the debts were incurred and no longer have documents required to challenge them.
The amounts are often linked to old business activity statements, GST payments, PAYG instalments and non-lodgement fines applied to those living overseas, with many of the debts unknowingly accrued and invisible to taxpayers for years.
An ATO spokesperson said on Wednesday the agency had “heard the concerns raised by the community”.
“The ATO has paused all action in relation to debts placed on hold prior to 2017 whilst we review and develop a pragmatic and sensible way forward that takes into account concerns raised by the community,” the spokesperson said.
“It was never our intention to cause frustration or concern.”
