ATO extends small business assistance package for another year

The Federal Government has welcomed the Australian Taxation Office’s decision to extend the Small Business Assistance Package for another year until 30 June 2011.

But one industry expert says businesses need to be careful about using these benefits to delay getting their own finances in order, as it could impact their ability to get finance.

Tax commissioner Michael D’Ascenzo announced the plan today, meaning small businesses with turnover of under $2 million will still be able to access 12-month interest-free payment arrangements and the deferral of activity statement payments for a further 12 months.

Assistant Treasurer Nick Sherry and Small Business Minister Craig Emerson said in a statement the assistance package has already helped arrange 100,000 interest-free payment arrangements, and has granted 6,600 activity statement deferrals.

The pair also said the revenue cost of extending the package will come to about $55 million for the 2010-11 financial year.

But CPA general manager Paul Drum says while the initiative is a good one, businesses need to avoid simply taking a deferral because the choice is there.

“This is a good thing. The Government is cutting businesses some slack to provide a bit of leniency in tough economic times. It’s a welcome initiative.”

“But our advice to small businesses in this regard is that lenders do take into account whether you’re paying these things to the Government. If you don’t make these payments it can be problematic when accessing finance, given banks are asking to see evidence if you’ve made these payments on times.”

“If you’ve got the cashflow, you should make these payments and skip a deferral. Otherwise, it could bite you in the end.”