In our digital world, when it comes to business reporting, superannuation and tax payments, it is harder and harder to ‘hide’ if you find yourself falling behind with your obligations.
The ATO is attempting to recoup huge business tax debts, with reports from April this year saying that overdue amounts have passed $50 billion. Almost two-thirds of this is owed by small businesses, which has forced the tax office to take a stricter approach to unpaid tax and superannuation.
Over the last year, the tax office has stepped up its endeavours to reclaim overdue tax payments and ensure new bills are paid in a timely manner.
Is your business in the spotlight?
The ATO has made its stance clear: businesses with tax debt that ignore payment reminders, fail to engage or neglect their tax and super obligations are its primary focus. By putting enforcement measures into action, it aims to level the playing field for businesses that do the right thing and comply with their tax duties. The ATO explains that this step is an attempt to “make it fairer for businesses that do the right thing, as we change our approach to collecting unpaid tax and super. We are now focusing on businesses who refuse to engage with us and continue to ignore SMS and letter reminders.”
If your business has overdue GST, PAYG withholding or employee super contributions, as the Director, you’ll experience the following:
● Interest charges on the business tax debt you owe
● SMS, letter and phone reminders
● Tax refunds being applied to your outstanding debt
● Referral to a debt collection agency
While the ATO is committed to listening to business owners and helping them get back on track, ignoring reminders and disregarding payment requirements won’t make the problem go away. Instead, you risk lining yourself up for a Director Penalty Notice and potential
garnishee orders, which will allow the ATO to collect unpaid amounts directly from you or your business.
What to do if you have overdue tax
If your business has tax debt, you need to take some form of action in order to avoid a worst-case scenario.
Here are some steps to resolve the situation:
● Contact your tax accountant: Your accountant can help you work out a plan and reach out to the ATO on your behalf to discuss the situation.
● Set up a payment plan: A structured repayment plan that suits your current financial situation will save you from being served with a penalty notice. However, you will need to make sure you meet your payment obligations each month while also paying your quarterly BAS and super.
● Explore financial hardship options: If you are experiencing genuine financial hardship, additional options may include deferring payment due dates, interest remissions and access to compassionate release of your super. Make sure to get qualified advice before you go down one of these roads.
● Liaise with your accountant regularly: Put measures in place so you don’t fall further behind with your tax obligations.
● Engage additional help: If a payment plan will put too much pressure on you and your business, ask for a referral to a financial planner, broker or legal expert who can help you explore other forms of finance, restructuring or insolvency.
Once you have things under control, you can work towards a scenario where your tax and super obligations are paid in full and on time every month, which will give you more headspace to focus on growing your business.
Need help to manage overdue tax?
Mobbs & Company are tax accountants who can help you get your tax and superannuation payments back on track. Schedule an appointment with our experience team today.
