New ATO Powers
It has just become even more important to keep on top of the money you owe to the Australian Tax Office (ATO).
A recent announcement from the government affects all small businesses. The ATO has currently taken on the role of reporting small business tax debts to credit reporting agencies.
Small Business, Big Tax Debts
The total tax debts to the ATO are more than $19 billion at present. In an effort to reduce this figure, the ATO are going to be starting to report tax debts for ABN holders that have debts larger than $10,000 and are overdue by more than 90 days.
Why is the government focusing on small business?
If it seems that small businesses are being focused on, it is because they represent the largest share of taxpayers who have debts: a share of 65.2%. But there is another reason to focus on small businesses. Only 72.3% of small business taxes are paid on time. Small businesses account for a $12.5 billion of the $19 billion owed to the ATO in outstanding taxes, a sizeable share.
What powers does the ATO have?
Small business should now be paying attention. The new rules announced give the ATO much more power to address outstanding tax debt that is owed by small businesses.
- Previously, the ATO wouldn’t take action until a business owed an amount of $345,000 of debt
- Now, the new rules lower the threshold to a tax debt of $10,000
- For debts which are more than 90 days late, the ATO can now report them to credit agencies
- The ATO can now also to hire external debt collectors
What can you do about it?
Manage your cashflows
It is most important to prevent debt in the first place. This means keeping track of your upcoming PAYG, BAS and income tax. By doing this, you can avoid any surprises when it’s tax time.
Reminder: BAS and PAYG are due on the 28th of January, April, July and October
Using accounting software (examples include Xero, MYOB and QuickBooks), you can keep on top of how much tax you will owe at the next quarter.
Negotiate a payment plan
If you are already behind on your taxes, it’s not a good idea to ignore the problem as it could make the situation worse. One options is that you might be able to negotiate with the ATO for a payment plan to help you pay back your taxes over time. Are you eligible for a payment plan? Contact the ATO to find out.
Take out a business loan
So that you can pay back the ATO, FundingPro can help you find a loan. With both unsecured and secured options, FundingPro will find you the best loan, in the fastest time at affordable rates.
Taking out a loan will allow you to pay back the ATO over time and it removes the risk of being reported to credit agencies.
When deciding to take out a business loan, it is important that you consider whether it is appropriate to your individual circumstances.
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