Minister for Small and Family Business Michaelia Cash has asked the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Kate Carnell, to look into the ATO's practices in pursuing early recovery of tax debts from small businesses who are in dispute with the ATO. 

The Minister said she was determined to make sure the ATO treats small businesses fairly.

"Early recovery can be devastating for a small business, and is particularly damaging when the small business disputes the recovery and then goes on to win the case," she said.

The Minister has asked the Ombudsman to look into the extent of the problem and its impact on small businesses, to gather a holistic picture of how current systems impact people running small businesses. The scrutiny will focus on historical cases and will not include live cases currently before the AAT.

The ASBFEO's 2018 research into unfair treatment by the ATO found some serious system-wide issues affecting the small business sector, including in the area of early debt recovery. The Ombudsman heard from a number of small businesses devastated financially by this practice, which is made all the worse if the ATO gets it wrong.

The Minister said that although she understands the ATO will not enforce recovery of a tax debt other than in exceptional circumstances, "there may be cases where the errors have occurred, and this has substantial consequences for these businesses, which needs to be avoided".