Can a director become personally liable for a company’s unpaid taxes and how can you avoid this?April 13, 2022
ATO Debt Payment PlanSeptember 8, 2022
Due to the debilitating impact of the COVID-19 pandemic in recent years, the Australian Taxation Office (ATO) postponed active tax debt collection to assist with cash flow as businesses rode the storm. However, this ‘grace’ period is now over and the ATO are very clearly reminding us that these tax debts were deferred, not eliminated.
ATO have commenced active debt collection of tax debt
A recent recruitment campaign by the ATO, coupled with increased outbound activity chasing the status of business tax debt indicates that the ATO now means business. For businesses with debt in excess of $100,000, working with the ATO to manage debt is crucial. Under a bill amendment passed in 2019, the ATO has the power to report tax debt to credit reporting agencies – which can have significant impacts on the future of the business.
It is now time to face your tax debt head on
Ignorance is unfortunately not bliss when it comes to tax debt. With the world making strides towards normality post pandemic, the proactive intentions of the ATO simply cannot be ignored. No doubt a significant tax debt can induce many sleepless nights, but rest assured there are palatable solutions available.
You might assume that a large tax debt signifies the end for your business but winding up your company or declaring bankruptcy is not the answer. As tax debt specialists, we can confidently say that there is help out there…you just need to get the right help.
With a single mind focus, working solely with clients to address their tax debt, at Tax Assure we are able to use decades of experience to tailor and present innovative resolution proposals to the ATO on your behalf. Taking into consideration the unique financial needs of your business, we craft a proposal that will include an ATO debt payment plan and overall debt reduction strategy. This ensures that as a business owner, you can fulfil your ATO obligations under terms that support the longevity of your business.
How to avoid being reporting to credit bureaus
Engaging with the ATO to manage your tax debt is the key to avoid being reported to credit reporting agencies. With the ATO having the power to report your business if your debt has passed 90 days and is in excess of $100,000, it is crucial that your engagement is aligned with the ATO’s expectations.
In order to ensure your ‘engagement’ satisfies the ATO, it is highly recommended that you consult a tax debt negotiation specialist to represent your company and ensure that a suitable strategy can be executed including a tailored ATO payment arrangement, and reduction of overall debt. This use of a tax debt specialist and inclusion of a payment plan is viewed as the ‘right’ kind of active engagement. This approach satisfies the ATO as they commence receiving payments against the debt and satisfies the business as a tailored plan is constructed with terms that favour ongoing viability.
Making tax debt repayments easier
Getting on the front foot as soon as possible will bring you the best result in the face of tax debt. As mentioned, engagement of a specialist to negotiate your tailored ATO debt payment plan should be your first step as this will not only map out your path forward but will also likely see a reduction in your overall debt.
Secondly, developing a strategy for effective management of your cash flow is a critical component to managing your tax debt. Inconsistent cash flow continues to be a major pressure point for businesses, contributing to issues such as:
- a) Rising debt (and other forms of debt)
- b) Supply chain issues
- c) Customers not paying their invoices on time
Finding options to help boost your cash flow
Government assistance such as the SME Recovery Loan Scheme is designed to help small to medium sized businesses recover from the ongoing effects of COVID-19 through the provision of affordable business finance. Earlypay is one such lender, offering Invoice Finance under the scheme.
Invoice Finance unlocks cash tied up in unpaid invoices so the business can essentially access funds from their accounts receivable before the customer has paid. Benefits of Earlypay’s SME Recovery Loan Scheme include:
- Finance from $50K to $5m
- No real estate security
- No minimum trading history
- Fast approval – as quick as 24 hours
- Supports businesses of all shapes and sizes
- Can support business struggling with tax debt
Sale-back Asset Finance is another option to assist boost your cash flow. Allowing you to unlock equity in assets owned by the business. Unlocking capital in this manner can allow you to access cash and make ATO repayments when needed.
You are not alone
If you are struggling with tax debt, you can rest assured that you are not alone. You can also gain relief in knowing that by combining the expert assistance of Tax Assure and Earlypay, you will have the right experts on your side to find a tailored solution that will help you manage the process, find solutions, and help you pay down your tax debt.
- Optimise debt position
- Negotiate with ATO on debt options, payouts, ATO payment arrangement and debt reduction strategies
- Reduce overall ATO debt
- Provide flexible finance options (SME Recovery Loan Scheme and Sale-Back Finance)
- Facilitate cash flow to support growth
Together, we can assist you to improve your cash flow, repay your debt, and ultimately grow your business into the future.