Got a tax debt? Watch out! The ATO is coming for you

Owe money to the Australian Tax Office (ATO)? It’s time to start sweating.

Money owed to the tax office has blown out by 21 per cent in just four years.

Sitting at $35.3 billion, that’s more than half of the annual GST take and more than both the annual education and defence budgets.

Which is why the ATO has tightened its belt and has begun to put into practice what it preaches.

The ATO’s new debt collection strategy focuses on “making it as easy as possible for businesses and individuals to understand and meet their tax obligations, including paying debts” – AKA if you owe him money the taxman is coming for you.

Many business owners are unaware of how detrimental a tax debt can be for your business.

Banks hate tax debts, so if you’re looking to get a loan it’s likely the bank won’t give you one if you have a tax debt.

The Australia Prudential Regulation Authority (APRA), the regulator of financial institutions, has determined that banks can’t loan money to companies and individuals with a tax debt.

Changes to superannuation payments have also made it easier for the ATO to know if you haven’t serviced a tax debt.

The new SuperStream process for paying superannuation alerts the ATO if you haven’t paid your employees’ super.

Historically, the only way the ATO could know if you haven’t paid your employees’ super was if your employees alerted the tax office themselves.

If you’re not careful about meeting your tax obligations, the ATO can fine you and take the money out of your personal account as director of the company.

But it’s not all doom and gloom.

The ATO has put in place measures to educate businesses and individuals on their tax obligations and have created clearer pathways of informing people of their debt.

They recognise that even viable, well-run businesses occasionally experience short-term cash flow difficulties and the ATO has vowed to work with businesses in trouble to meet their obligations.

This can be through payment arrangements, remission of interest and hardship provisions.

The ATO is now contacting businesses more frequently in the early stages of their arrears.

But to safeguard against any possible fine from the ATO, MWM urges businesses to ensure they have access to correct, up-to-date information from their financial software.

Accurate reporting is a must to avoid a knock on the door from the ATO.

It’s also important that businesses understand that the laws haven’t changed – the rules are the same as they have always been, but the ATO is now enforcing them.

If you’re worried you’re at risk, contact your MWM accountant today. We can ensure you’re meeting your obligations. Call 07 5596 9070.

Resilience in numbers

Resilience in numbers

To our friends and colleagues out there supporting local business in these crazy economic times; you’ve done a great job. You all deserve a pat on the back! Professional advice is more critical than ever when trying economic times are adding to the pressure on...

$600 million package to help Queensland businesses

$600 million package to help Queensland businesses

Support is available if you are impacted by the Queensland lockdowns. The lockdown support client guide for Queensland businesses has been updated for the top-up grant funding announced by the Treasurer last week.  The Commonwealth and Queensland Governments...

Embrace, adapt and enjoy the change. Act now!

Embrace, adapt and enjoy the change. Act now!

The COVID-19 pandemic has been a massive wakeup call to businesses and organisations everywhere. It shows that change remains a constant and you cannot settle in for the slow grind, because major unforeseen events can occur, throwing a spanner in the works. You may...