Small Business and ATO Tax Debt

Small Business and ATO Tax Debt

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 , 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!