According to recent reports, the ATO is focusing on small and medium businesses to recover outstanding tax debts, with an apparent increase in calls and letters to directors of companies that owe the ATO money.
Historically, the ATO has been more inclined to pursue debts during times of budget deficit and now, with the recent changes to the budget showing lower government receipts, is one of those times with the ATO clearly being under more pressure to increase revenue by collecting more debts and ensuring compliance.
Finance services are seeing evidence of the ATO’s more aggressive collection activities through the use of calls and letters demanding payment. Further, are also seeing the tax office issuing written warnings that the director may be held personally liable for unpaid PAYG and unpaid superannuation where BAS’ is not lodged within 3 months of the due date.
If you receive a letter or call from the ATO regarding a tax debt, we advise you to proceed with extreme caution.
Many requests from the ATO will seek some action including the idea of setting up a repayment plan to pay the outstanding tax debt. These plans, whilst apparently helpful in relieving the immediate pressure from the tax office, can have the effect of committing a director to personal liability for a company tax debt.
The problem then for small business owners if they sign up for such an agreement is that not only are they trying to avoid the prospect of liquidation for their company but they know they will then face bankruptcy and the subsequent loss of all their personal assets in cases where the repayment plan fails.
If you currently have a tax debt with the ATO and you receive a call or letter asking for payment, we strongly recommend that you seek immediate help from an experienced insolvency practitioner or liquidator who understands and who is a specialist in dealing with tax debts of this type.
Proper steps must be taken early in order to limit your personal exposure to a company tax debt.
Ignoring the problem or agreeing to a personal guarantee will place your personal assets, including the family home and anything else of value, within the reach of the ATO should your business fail.
If you have received a demand from the ATO, or fear one may be on the way, you should call The Insolvency Experts free advice line that is open 24 hours per day. The line offers free insolvency and business liquidation advice to all business owners. All calls are answered by a senior partner with confidentiality assured.
The Australian Taxation Office (ATO) is intensifying its efforts to recover outstanding tax debts from small and medium businesses, a move likely to increase bankruptcy pressures on business owners.
With the government facing a budget deficit, the ATO is under heightened pressure to enhance revenue collection and compliance. This has resulted in a surge of calls and letters to company directors demanding payment of overdue taxes.
Financial service providers have noted the ATO’s more aggressive tactics, which now include issuing written warnings to directors about personal liability for unpaid Pay As You Go (PAYG) and superannuation contributions if Business Activity Statements (BAS) are not lodged within three months of the due date.
This shift in the ATO's approach signals a critical need for business owners to proceed with caution when contacted about tax debts.
Often, the ATO will suggest setting up a repayment plan to manage the outstanding debt. While this may seem like a temporary relief, it can inadvertently commit directors to personal liability for company tax debts.
For small business owners, agreeing to such plans could mean facing personal bankruptcy and losing all personal assets if the repayment plan fails.
Business owners with ATO tax debts must seek immediate assistance from experienced insolvency practitioners or liquidators who specialize in handling tax debts. Taking proactive steps early can significantly limit personal exposure to company tax liabilities.
Ignoring the problem or agreeing to personal guarantees can jeopardize personal assets, including the family home.
For those receiving demands from the ATO or anticipating such actions, The Insolvency Experts offer a free advice line available 24 hours a day. This service provides confidential and expert advice from senior partners on insolvency and business liquidation issues, ensuring business owners can make informed decisions to protect their financial well-being.
Seeking professional help at the earliest sign of trouble is the best strategy to mitigate the severe consequences of the ATO’s debt recovery measures.
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