Businesses are being encouraged to do more in clearing their tax debt with the Australian Tax Office (ATO). Earlypay’s Daniel Riley noted that the ATO was back to making collections on tax debts owed by small businesses after having temporarily ceased their efforts during the worst of the pandemic. He warned of the likelihood of ATO taking harder measures.
Despite supply chain issues that have persisted during the pandemic, Riley noted that reopening of the borders was likely to result in a boost to business. He encouraged businesses to capitalise on this financial gain to clear their ATO debts. He also urged accountants to help in creating payment plans for these debts as there were applicable ATO penalties and interest that would keep adding to the debt.
He recommended focusing on debts that were attracting the highest level of interest or penalties and covering the minimum payment on other obligations.
This reminder comes not long after the ATO announced that it would crack down on employers that had failed to pay their workers superannuation during the pandemic. An estimated $5 billion is believed to have been withheld, affecting as much as 3 million Australian taxpayers. Deputy Commissioner, Emma Rosenzweig, confirmed to parliament that the ATO was empowered to inflict heavy penalties and pursue other action against employers that had not paid their required superannuation entitlements for workers.
She added that enforcement measures had been held back before this due to the negative impact the pandemic was having on businesses. This she said was to help in supporting and sustaining businesses through this trying time. She confirmed that the ATO was now set to renew its debt collection efforts and engage with businesses that owed monies.
Tax Assure’s Olga Koskie also noted that engagement was going to be key in preventing enforcement action against businesses. She advised against ignoring tax debt as late payments were considered non-compliance and would grant the ATO the authority to pursue enforcement action to make recoveries. Koskie noted that possible repercussions could include garnishee notices, penalty notices for directors, and bankruptcy notices.
The ATO has also advised that taxpayers who make payments to contractors may need to report these transactions in a Taxable Payments Annual Report (TPAR). Taxpayers are being warned that a failure to lodge their overdue TPARs from 23 March 2022 may result in penalties. This also applies to TPARs not lodged in 2021 or 2022, and clients that have already received three non-lodgement letters on the issue. Tax professionals are being asked to remind their clients to maintain good records and ensure they meet the deadlines of this obligation to avoid facing penalties.
Contact Accountancy Insurance
We would love to hear from you.
About Accountancy Insurance
Thousands of accounting firms offer our tax audit insurance solution, Audit Shield to their clients. Find out why.