- There were approximately 1.7 million individuals and companies who owed debts to the ATO;
- The ATO was owed over $21 billion in “collectable” tax, $14 billion of which was owed by small businesses.
The above figures have actually increased since the global financial crisis in 2008.
The AT has been more aggressive in the last 12 months in initiating recovery action to collect outstanding tax debts including by issuing:
- Director Penalty Notices to company directors in respect of outstanding PAYG Tax and superannuation.
- Garnishee notices in respect of bothcompanies and
- Liquidation or bankruptcy action.
More recently we’ve found the ATO has taken a very hard-line approach in negotiating payment arrangements. This is particularly the case where taxpayers have been significantly behind in lodgement obligations or in making required payments and have not been proactive in dealing the ATO. In these types of situations as part of any payment arrangement the ATO is likely to:
- Want a substantial lump sum payment up front;
- Want the tax debt paid over a shorter period than what they would have agreed to in the past, with the ATO preferring tax debts paid within 12 months;
- Not waive any penalties or general interest charge; and
- Aggressively pursue recovery action if a payment arrangement is not agreed to or is breached.
However, the ATO is more prepared to work with taxpayers who make required lodgements on time and then engage with the ATO in trying to negotiate a payment arrangement or even multiple payment arrangements.
If you are unable to meet your business or personal tax liabilities when they fall due the worst thing to do is not maintain your lodgements up to date in the false hope that the ATO will not chase you for unpaid tax because they don’t know the amount of the liability. If you are in these circumstances you should obtain professional advice and if you are able to pay tax liabilities going forward then seek to proactively engage with the ATO to secure a payment arrangement.
We Can Assist
We may be able to assist you with your tax debt and any problems you are having with a business or company you trade, so we encourage you to get in contact with us for a free, no obligation discussion