The Australian Taxation Office is receiving a flurry of requests from businesses asking for payment extensions and tax debt pardons, as the downturn hits cashflows.
In a speech to the National Institute of Accountants in Brisbane last week, second commissioner Jennie Granger said telephone calls from businesses to the tax office regarding debt obligations have risen sharply, and the number of payment arrangements negotiated in October increased by 23% from last year.
Granger said the tax office is willing to provide businesses with chances to put themselves straight, and said struggling but viable SMEs “will be provided with every opportunity to get back on track”.
The tax office offers assistance through time extensions for tax payments through installments and even debt cancellations. It says that $23.5 million of debt in 927 cases has been cancelled.
Terry Hayes, senior tax writer at Thomson Reuters, says struggling businesses simply need to contact the taxman before things get too bad.
“The first thing they have to do is get together with their adviser and know what the numbers are, and just approach the tax office,” he says.
“The ATO have got to look at the company’s tax compliance history – if up until now they’ve paid things on time, that’s a big help. If they’ve got a history of falling behind, that won’t be as helpful. The taxpayer needs to explain the current situation, but if they’ve got a good track record it’s in their favour.
“It’s far better to approach the ATO than to try and muddle by; and next thing you know they’re on your doorstep requesting payments – that’s the worst result.”
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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