Small businesses always like tax
season, really I hear you say!! You likely have a lot of questions floating around if you’re getting
ready to file your quarterly BAS. When are GST payments due? How often must I
make PAYG payments? What are the consequences if I submit my BAS late?
With all the deadlines clearly
stated, the Australian Tax Office’s own website is actually very helpful for
lodging and paying your BAS. You may view all the deposit dates at www.ato.gov.au , however keep in mind that tax
agents may use different dates. However, you might need to look a little
further if you’re looking for more details. If you believe you won’t be able to
file your taxes on time, here is a quick list of items to check for:
What Happens If You Can’t
Lodge and Pay Right Away?
One of the worst errors that many
businesses make is to believe that because they are unable to pay, they
shouldn’t lodge. A poor situation is only made worse by this. Failure to pay
and fail to lodge have different consequences. To lodge on time is always a
good idea because the ATO (and credit agencies) do favour firms who do so even
if they can’t pay right away.
Your best course of action is to
get in touch with the ATO as soon as you can if you can’t lodge or pay by the
deadline. Before a payment plan can be set up, they will ask you to first
submit any unlodged returns. You might, however, be able to work out an
extension to avoid any unwarranted fines.
Being proactive is key in this
situation. The ATO is willing to work with individuals who are willing to
cooperate with them and is not aiming to harm small businesses. It’s essential
to act quickly and stop a problem before it ever arises.
Penalties for Failure to Pay
The ATO does not want to pursue
tax debts to the extent that it harms businesses. Having said that, they are
undoubtedly punishing companies who amass and fail to pay their tax obligation
far more severely.
Keep in mind that all subsequent BAS payments are due in full and on time if you are able to work out a payment plan with the ATO. If you fail to do so, the ATO has the right to cancel the payment plan, at which point the whole amount is payable.
Regardless of whether you have a
payment plan in place, your tax obligation will start to accrue interest, and
the ATO will apply any tax refunds you are entitled to and reduce your debt.
The ATO will refer your debt to
outside collection companies (such Dun & Bradstreet and Collection House)
if you don’t have a payment plan in place. This is where things could start to
get a little risky for your credit score.
After that, the ATO will likely
take more drastic measures, which may include legal notices and court
proceedings. Even if this is the worst case situation and it rarely happens,
you should still be aware of how bad things might become if you choose to disregard
the ATO.
Methods for Dealing with Tax
Debt
Dealing with past-due tax debt
can be challenging, in addition to keeping your cash flow under control and
submitting your taxes on time. Although the ATO does provide payment plans for
companies wishing to pay off their tax liability, SMEs may not always find
these options suitable.
You may also choose to refinance
your tax obligation. Here’s where we step in! Small firms can take advantage of
flexible financing alternatives from lenders we use as they specialise in
working capital loans for SMEs. Many firms have already benefited from our
assistance in managing their tax debt and cash flow!