Serious Hardship Relief: In Need of a Serious Rethink?

Abstract

The COVID-19 pandemic and its economic aftershocks have put into strong focus the tax issues faced by financially vulnerable individuals and small business. With this economic backdrop, it is likely that more taxpayers will be in severe financial stress, which will in turn increase the need for release from tax debts on grounds of serious hardship. However, these provisions are outdated and in urgent need of reform. This article outlines their legislative background and the regulatory landscape, and explores the systemic issues faced by taxpayers in litigating serious hardship cases. Further, it makes four key recommendations to modernise the current tax policy and law, and the design of these provisions. These recommendations are designed to attain better outcomes for financially vulnerable individuals and small businesses while also maintaining trust and confidence in the Australian Taxation Office among the wider community.