Article by Jimmy Chong, Accountant at Tax Debt Solved.
Does your business have an existing payment arrangement with the ATO? Is your business finding it hard to keep up with the payments? TAX DEBT SOLVED can assist you in renegotiating your business’ current payment arrangement with the ATO.
Below is an example of how we recently assisted a business in renegotiating a payment arrangement with the ATO.
Our client traded over 50 retail stores and had begun its business more than 30 years ago. The company was also a franchisor for a number of stores and managed over 100 franchisees at one point. When we were approached by the client:
- The client had an existing payment arrangement with the ATO whereby $40,000 was paid monthly in reduction of a tax debt owed to the ATO;
- The client’s tax debt totalled over $800,000;
- Due to market conditions, the number of franchisees which our client managed had dropped significantly, with a corresponding drop in revenue;
- As a result, our client was finding it hard to keep up with the monthly payments to the ATO.
Despite the challenges faced by the business, our client had developed a strategy to improve revenue and reduce costs and approached us to assist in negotiating a reduction in monthly payments with the ATO. It was imperative that the monthly payments were reduced to ensure the ongoing viability of the company’s business.
The business at that point was unable to keep up with paying its debts. The options available to the company’s director were to:
- Liquidate the company;
- Appoint an Administrator and put forward a proposal for a Deed of Company Arrangement; or
- Seek to enter into a revised payment arrangement with the ATO with reduced monthly payments.
The company primarily engaged us to put a proposal for a payment arrangement to the ATO. However, we also provided guidance regarding how to reduce costs for the business, including recommending closing unprofitable stores.
Having presented the predicament that the business was facing to the ATO, the ATO agreed to a revised payment arrangement. It was eventually agreed that the company would pay a reduced amount of $8,500 per month for a period of 12 months, after which the ATO agreed to negotiate a further payment arrangement. The revised monthly payments placed the company in a better position to turn its business around and return to profitability.
Contact Us for Assistance
If you have an existing payment arrangement and are finding it hard to keep up with the payments, please contact us for a free, no-obligation consultation. We will discuss all options which may be available to you.