We want to bring to your attention some crucial updates regarding your tax obligations and the ATO’s stance on outstanding debts.
During the past few years, we’ve seen significant changes in the way the Australian Taxation Office (ATO) has handled tax debts, particularly in light of the pandemic’s economic challenges. The ATO temporarily adopted a more lenient approach, offering various concessions, including deferred due dates, remitted penalties and interest, without the need for extensive evidence.
However, the times are changing, and the ATO is returning to its standard debt collection procedures. This shift carries substantial implications for those who might have grown accustomed to the leniency of the past.
Here are the key points you need to know:
Increased Focus on Timely Payments: The ATO is now placing greater emphasis on timely tax payments. This means paying your tax obligations in full and on time is more crucial than ever.
Accumulated Debt: Over the last four years, collectable debt for businesses has surged, reaching a staggering $50.2 billion by June 2023, representing an 89% increase. This trend is unsustainable and must be reversed.
Interest and Penalties: Starting immediately, the ATO will be less willing to negotiate interest remission and payment plans. Waiting for the ATO to chase payment after the due date will result in a different and less flexible experience, with limited room for concessions.
Level Playing Field: The ATO’s role is to create a level playing field where all taxpayers pay the right amount of tax, in full, by the due date. They are unapologetic about this role and will actively enforce it.
What This Means for You:
Pay on Time: It is now more important than ever to pay your tax obligations on time. The ATO will be less lenient with interest and penalties, so avoiding them altogether is in your best interest.
Engage Early: If you anticipate financial difficulties or need support, contact us or the ATO before the due date. Early engagement will be critical in influencing future payment behaviours.
No Waiting Game: Waiting for the ATO to contact you before paying your obligations is no longer a viable strategy. Take proactive steps to fulfil your tax responsibilities.
Small Business Amnesty:
The government has introduced a Small Business Lodgement Penalty Amnesty program, encouraging small businesses to update their tax obligations. The amnesty covers overdue income tax returns, business activity statements, and fringe benefits tax returns due between 1 Dec 2019 and 28 Feb 2022.
If eligible, lodging overdue returns between 1 June 2023 and 31 Dec 2023 will automatically remit any failure to lodge penalties, with no need to request a remission.
To qualify, businesses must have had an annual turnover below $10 million when the original lodgement was due. Please note that this doesn’t apply to privately owned groups or individuals with over $5 million in net wealth.
We understand that these changes might bring some challenges, but we are here to help you navigate through them.
If you have any questions on the above, please do not hesitate to contact our team on (07) 4052 0800.