Is it Possible to Get Tax Debt Relief From the ATO?

Is it Possible to Get Tax Debt Relief From the ATO?

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.