Dealing with a tax bill can be a challenging experience for many Australian businesses. Recently, the Australian Taxation Office (ATO) has adopted a proactive approach to debt recovery. However, their focus remains on working collaboratively with businesses to manage and resolve tax debts effectively.

Checking Your Tax Debt

You can review your tax debt by accessing your income tax assessment notices or using the ATO’s online services. Alternatively, you can contact the ATO directly via their business enquiries line at 13 28 66. Your registered tax agent can also assist you in reviewing your tax position.

Repayment Options

If you’re unable to pay your tax debt in full by the due date, don’t panic. The ATO offers several repayment options to suit various circumstances:

  • Self-service payment plans: For debts under $100,000, you can set up a payment plan online, provided you don’t already have an active plan for the same debt. These plans allow you to spread repayments over up to two years.
  • Tailored payment plans: For larger debts or more complex financial situations, you can propose a customized payment plan. The ATO offers tools like the Payment Plan Estimator and the Business Viability Assessment Tool to help you create a realistic proposal.

By entering a payment plan, you commit to staying up-to-date with future tax obligations, so it’s essential to evaluate your financial capacity carefully.

Preparing a Payment Plan Proposal

When proposing a payment plan, the ATO will require detailed information based on your business structure, including Income sources, Expenses, Cash flow data for the past three months.

Accurate information is critical to ensure your proposal is accepted.

Interest Charges on Unpaid Tax Debts

Unpaid tax debts attract the general interest charge (GIC), which is currently 11.38% per annum. Additionally, the government has announced plans to make GIC non-tax-deductible, potentially increasing the overall cost of carrying unpaid tax debts.

Take Action Early

The most effective way to manage your tax debt is through proactive communication. If you’re facing difficulties, remember engaging early and honestly can help you avoid serious consequences such as:

  • Director penalty notices
  • Garnishee notices
  • Disclosure of your tax debt to credit reporting bureaus

Need Assistance?

Contact the ATO or your contact our team as soon as possible.