ATO’s Use of Private Debt Collectors Sparks Concern Over Vulnerable Taxpayers
Canberra - The Australian Taxation office (ATO) is facing scrutiny over its increasing reliance on private debt collectors, with concerns raised about the impact on vulnerable taxpayers, including welfare recipients and victim-survivors of domestic violence. The ATO has contracted Recoveriescorp since 2022 – its frist use of external debt collection since before the pandemic – and the agreement is set to continue until 2026, according to public tender details.
More than 355,000 taxpayers have been referred to Recoveriescorp, a practice that has drawn criticism despite a goverment ban on Centrelink using external collectors to pursue social security debts following the robodebt scandal. While Centrelink is restricted, the ATO is permitted to employ debt collectors for alleged tax debts, even when those debts relate to welfare income. This discrepancy is fueling debate about fairness and the potential for harm to those already facing financial hardship.
Dr.vivien Chen,a senior lecturer at the Monash Business School,argues that outsourcing debt collection exacerbates challenging situations. “We know of people being pursued for tax debts who are experiencing vulnerability, including victim survivors of family violence who are coerced into tax debts consequently of financial abuse,” Chen said. ”Contact from debt collectors is stressful and aggravates the harm that victim survivors experience when fleeing violence.”
Recoveriescorp maintains it is committed to respectful treatment and adherence to formal debt collection guidelines. However, reports suggest some welfare recipients have experienced “heavy-handed” processes. The ATO’s move to outsource debt collection reflects a focus on revenue recovery, but critics argue it prioritizes profit over the wellbeing of Australians, particularly those in vulnerable circumstances.
