Struggling small and family businesses are being urged to be proactive at tax time, as a new report reveals declining payment plans despite record collectible debt owed to the Australian Taxation Office (ATO).
The Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, says the report, released today by the Inspector General of Taxation and Taxation Ombudsman (IGTO), shows that although SMEs owe $21 billion to the ATO โ well over half of this collectible debt is held by just 6.4% of SMEs.
โThe vast majority of small business owners are doing the right thing and complying with their tax obligations,โ Mr Billson says.
โThis report shows that while collectible debt owed by small businesses to the ATO has reached an all-time-high, in reality the breakdown sees the majority of debt owed by very few SMEs while the remainder is very small amounts of debt spread over a small percentage of Australiaโs more than 2 million SMEs.
โIn fact, less that one per cent of small businesses owe $2.5 billion to the ATO, according to the IGTOโs report.โ
Mr Billson says the reported decline in small business payment plan arrangements over the past three years is a concern.
โFor those small businesses that are struggling to meet their tax obligations, now is not the time to put your head in the sand,โ Mr Billson says.
โSmall businesses are strongly encouraged to get on the front foot by lodging now and reaching out to the ATO โ either online or by phone – for a tailored payment plan, if having difficulties meeting payment obligations.
โThe ATO has told my office it is also introducing a system for payment plans in arrears to give small and family businesses a chance to get back on track rather than falling into default and having to start again.
โWhile the ATO is signalling plans to return to collection action, which it relaxed during the pandemic, it has also indicated to my office that its predominant strategy is to support and assist small businesses wherever possible.
โThe ATO has acted on key recommendations in ASBFEOโs report:ย A tax system that works for small businessย to turn its small business independent review service into a permanent offering.
โThis is in addition to the Australian Government giving the Administrative Appeals Tribunal (AAT) greater powers to pause or change debt recovery action applied to small businesses in dispute with the ATO.โ
Small businesses engaged in a tax dispute are encouraged to contact ASBFEO for assistance on 1300 650 460 or emailย [email protected]
