COVID cases are slowly declining again after the latest wave and we are now adjusting to post- pandemic life.
It was certainly a difficult couple of years, with many businesses facing hardship due to lost revenue. Because of this, the ATO actually eased the pressure it put on small business in regards to paying tax debt.
Now the dust has settled, those debts are being pursued again.
Have you received a message from the ATO?
Tax is the government’s primary source of revenue. It has to collect the money it is owed or it won’t be able to build roads, fund research/schools etc and support people in need.
In 2022, the amount of unpaid tax bills from Australian businesses adds up to a jaw-dropping multi-billion dollar figure.
If you are not up to date with your small business tax payments, GST, PAYG tax obligations and superannuation payments, you may receive a text message or letter from the ATO.
As shared by the ABC, “As of August 31, 2021, the tax office had issued 842,845 reminder letters, with around 55 percent of them going to small business. At the time of contacting the ATO for this article, it had sent out letters warning about outstanding debts to 29,552 businesses. A further 52,319 letters warning about the potential for Director Penalty Notices (DPNs) were sent to people in charge of these companies.”
A Director Penalty Notice can be serious as it gives a limited time period to repay certain debts before the director becomes personally liable.
What to do about tax reminders
COVID gave many businesses a ‘breather’ in regards to tax payments but money owed is still money owed.
If you have received notifications of overdue payments, the best thing to do is work with a tax specialist to arrange a payment plan with the ATO. This will allow you to make repayments in installments, although you may incur interest, just as you would with a normal loan.
The other important step may be to review your taxes. If they were completed in a rush, even over the past two or three years, there may have been inaccuracies in the bookkeeping or accounting process. This could have left you with a tax bill you weren’t prepared to pay. As a result, you end up trapped in a cycle of chasing your tail in this area.
Many business owners fail to realise it is possible to review past tax returns. If you work with a tax specialist and go through your accounts in detail, it may be possible to revise the amount you owe.
Work with a tax specialist to stay on top of tax obligations
It’s never a good feeling to be chased for money.
The best approach with tax is to try to stay a step ahead by checking in with your tax accountant regularly and doing some forecasting to figure out how much you will owe so you can put the money aside.
When you work with a tax specialist on the Gold Coast, you can ensure everything is kept up to date. You’ll also be informed of your outstanding debt so you can make a plan to pay it off and avoid receiving messages from the ATO.
Need help to recover from post-COVID tax debt? Talk to Mobbs & Co.