
Having a
tax debt can be a significant burden, impacting both your business and your
emotional well-being. However, in some cases, you may be eligible for tax debt
relief. Here’s an overview of the conditions you must meet to qualify for
relief and the types of taxes that may be eligible:
Eligibility
for Tax Debt Relief:
The
Australian Taxation Office (ATO) offers specific relief services for tax debts,
but these services are typically available to:
1. Individuals: Personal taxpayers may
apply for tax debt relief.
2. Trustees of the estate of a deceased
person: In cases where a deceased individual’s estate owes taxes, the trustee
may seek relief.
To be
eligible for tax debt relief, the debt must be so burdensome that it
significantly impairs your ability to provide for essential needs such as
housing, food, and education. If the ATO believes you can still afford these
essentials while repaying the debt, relief is unlikely to be granted.
Unfortunately,
tax debt relief is not extended to companies, partnerships, or trusts. Tax
debts incurred within these structures typically must be paid. However, the ATO
offers separate services to assist businesses facing financial difficulties.
Types of
Tax Debts That Can Be Released:
While
the ATO provides relief for various personal taxes, it does not grant relief
for all types of taxes. Taxes for which relief is typically not available
include:
• Excess Contribution Tax
• Super Guarantee Charge
• Division 293 Liabilities
• Goods and Services Tax
• Director Penalty Notices
• PAYG Withholding
However,
numerous other taxes may qualify for relief, including:
• Medicare Levies
• PAYG Instalments
• Income Tax
• Mining Withholding Tax
• Fringe Benefits Tax
• Fringe Benefits Tax Instalments
• Medicare Levy Surcharges
• Managed Investment Trust Withholding
Tax
You may
also be able to claim relief from certain fees and penalties associated with
these tax debts.
Applying
for Tax Debt Relief:
The
application process for tax debt relief involves several steps:
1. Use the Approved Form: The ATO
provides an approved application form that must be used when applying for tax
debt relief. This form outlines the necessary conditions and collects the data
needed for the ATO’s decision.
2. Assessment of Financial
Circumstances: The ATO evaluates your financial situation to determine whether
you qualify for relief. They assess your ability to provide for essential needs
while facing your tax burden. If you can still afford these essentials, the
likelihood of receiving relief diminishes.
3. Examination of Assets and
Liabilities: The ATO considers your assets, such as your home, vehicle, and
investments, in the assessment. While some assets, like your home, may be
deemed essential, others, like investment properties, may be considered for
repayment. Purchasing assets while aware of a tax debt can be viewed as
unreasonable.
4. Other Factors: The ATO examines your
financial history, past compliance with tax matters, and the temporary or permanent
nature of your financial circumstances. They also consider your spending habits
when not addressing tax debts and whether you have additional outstanding
debts.
Preparation
Before Applying:
Before
applying for tax debt relief, it’s essential to ensure your documentation is in
order. This includes:
• Filing any overdue tax documents with the ATO to establish a record of your tax debt.
• Declaring any unresolved disputes with the ATO, as these may need to be resolved before seeking relief.
• Ensuring your contact information is accurate and up-to-date, so the ATO can reach you for communication regarding your application.
Remember,
having a tax debt can be a challenging experience, but you do have options.
It’s crucial to carefully evaluate your financial circumstances and consult
with professionals if necessary. Additionally, for business owners dealing with
tax issues, alternative solutions such as unsecured business loans from
organizations like Funding Small Business can provide assistance in covering
tax debt while offering more favourable terms.