The comments come after CBA reported a record $10.2 billion cash profit for the 2023 financial year, to which the business bank contributed nearly $4 billion. Business bank profits rose 32 per cent compared to the previous year and Mr Vacy-Lyle said it was “inevitable” CBA would become the biggest business bank in Australia.

“The long and the short of it is that people need to pay their taxes,” he said. “The ATO was incredibly patient during COVID-19. The easiest way for an accountant to advise a business on how to manage their cash flows is that the accountant would tell them ‘phone the ATO in terms of payment arrangements and manage your cash flow that way’.”

During the COVID-19 pandemic, small business collectable tax debt ballooned from $16.5 billion at the end of the 2019 financial year to $29.3 billion as of June 30, 2022. Small business comprises the overwhelming majority of tax debts. Total collectable tax debt was $44.8 billion, up 69 per cent, since June 30, 2019.

The ATO has been ramping up wind-up actions as it looks to collections. The tax office started 476 wind-up proceedings in the first seven months of 2023, compared with just 14 in the same period last year, according to analysis by The Australian Financial Review.

However, this was still much lower than pre-pandemic; in the first seven months of 2019, the ATO lodged 950 wind-up cases.

Mr Vacy Lyle added that the trend of small businesses taking advantage of the ATO’s more lenient stance “can’t persist forever; it absolutely can’t persist”. “It needed to be corrected and that’s what’s happening,” he said.

The ATO crackdown had occurred over the past six months, according to Mr Vacy-Lyle.

Australian Securities and Investments Commission data shows that more than 2700 companies entered administration or had external controllers appointed in the three months to June 30. This compared to about 1800 in the same period last year.