ATO to Ramp Up Debt Collection
The Australian Taxation Office has warned that when it comes to small business tax debt... the COVID-19 induced honeymoon is over.
After pausing its pursuit of unpaid taxes while jurisdictions were coping with COVID-19 outbreaks and lock downs, the ATO has started to chase debts again. So far, the ATO has targeted New South Wales, Victoria and the ACT.
WCT Advisory managing partner Andrew Weatherley says businesses shouldn’t be complacent: “It is likely the ATO will also increase its focus on Queensland small business, especially given outside certain geographic areas and industries, the state has not been impacted as greatly as other jurisdictions.”
As such anyone who finds themselves in the tax office crosshairs should not panic:
“Seek help quickly from a reputable and qualified advisor or accountant. We at WCT Advisory strongly recommend a proactive approach because it allows you more time to assess a greater number of options.”
The Sydney Morning Herald recently reported: “Public servants from the Tax Office, which was owed a record $55 billion at the end of June, began hitting the phones again, with the ATO confirming that those with the largest debts would be first to get a call.”
In a statement an ATO spokesperson confirmed all enforcement actions had “resumed” with penalties for non-compliance expected to be “more noticeable”.
“These enforcement actions will be prioritised for those clients representing higher risks and refusing to engage,” the spokesperson said.
“Our initial focus will be on taxpayers with higher debts before, including taxpayers with all other debts in the new calendar year. Taxpayers with Superannuation Guarantee debts may be prioritised irrespective of their debt value.”
The ATO acknowledged small businesses were some of the hardest hit during the pandemic - with some still facing cashflow issues - and it would continue to provide “tailored” support to the sector.
“Taxpayers facing difficulty meeting their obligations are encouraged to contact us or their registered tax professional and discuss their circumstances, so we can provide them with the most appropriate help and assistance for them,” it said.
More than one million taxpayers used payment plans throughout the pandemic, but the ATO warned, going forward, “we cannot help clients who do not engage with us”.
“Our approach is to minimise the need for enforcement through our enhanced engagement,” the spokesperson said, “the more we know about clients and their circumstances the better equipped we are to help.”
Options could include additional time to lodge, payment plans and remissions of interest and penalties.
Some Queensland businesses are still struggling despite some state borders being relaxed.
Mr. Weatherley says, “We can assist with understanding the financial position of the business, its underlying profitability and the options available to it to manage the ATO debt (including repayment plans) and other liabilities (it is rarely just the ATO).
“The ATO should continue to be sympathetic towards genuine COVID impacted taxpayers. However, it rightly should take a different, more aggressive approach to those businesses who were not substantially impacted or where the tax debts have increased substantially.”
ATO help with payment link: https://www.ato.gov.au/general/paying-the-ato/help-with-paying/
ATO What happens if you don’t pay link: https://www.ato.gov.au/general/paying-the-ato/if-you-don-t-pay/