Tax Debt Insights from Tom Jollye, Senior Tax Advisor

Tax debt can be a significant burden on businesses, affecting their financial stability and long-term growth. We spoke with Tom Jollye, Senior Advisor at Tax Assure, to discuss the common challenges businesses face and how they can overcome tax debt issues effectively.

Common Challenges Across Industries

According to Tom: “Cash flow management is the most common challenge. This is common throughout most industries; however, it appears to be profound in the construction and primary producing sectors.”

Poor cash flow can leave businesses struggling to meet their tax obligations, particularly in industries where payments are often delayed, leading to accumulating tax debt.

It’s crucial to address this challenge early on to avoid spiralling into more significant financial troubles.

Proactive management of cash flow, open communication with lenders, and establishing robust payment arrangements are essential strategies.

By collaborating with Tax Assure, businesses can better navigate these financial pressures and receive specialised guidance tailored to their circumstances, helping them effectively manage tax debt and explore available options with the ATO.

Client Success Story

Tom shared an example of how Tax Assure helped a full-service mining and civil engineering company manage its $5 million tax debt.

“Our client found themselves in tax debt due to delayed payments from head contractors,” Tom explains.

Despite being in prior payment arrangements, they were unable to sustain them due to increased debt with the ATO.

Tax Assure stepped in and secured a “scaled, long-term payment arrangement that mirrored their cash flow improvements as new projects came online.”

In addition to this, Tom and the team successfully “had the ATO remit $500,000 of General Interest Charge through a remission application,” helping the client reduce their overall liability.

Key Strategies for Success

Tom highlights the importance of early engagement with the ATO:

“Openly engage with the ATO from the outset of our engagement. Outline to the ATO where the problems were in the past, how they have been rectified, and why the future looks bright.”

According to Tom, being able to articulate a coherent journey to the ATO — past, present, and future — is vital for securing favourable outcomes.

Warning Signs of Impending Tax Debt Issues

When asked about the early warning signs that businesses should look out for, Tom points out that “the inability for an individual or company to meet their ongoing obligations on time and in full” is often the first sign of trouble.

This typically indicates cash flow problems, which can escalate quickly into tax debt issues if not addressed.

Navigating Legal Action from the ATO

While Tax Assure doesn’t provide legal advice, Tom emphasises the importance of transparency:

“Transparency and engagement with the ATO will help mitigate further legal action.”

The best course of action, he says, is to “enter into a compliant payment arrangement” to prevent the situation from escalating.

Proactive Role of Accountants

Accountants play a crucial role in supporting their clients through tax debt challenges.

Tom advises that “the best way to support their clients is to pick up on the warning signs early.”

Regular check-ins, monitoring cash flow, and making sure lodgements are in order are all essential steps for proactive management.

Emerging Trends in Tax Debt Management

Looking ahead, Tom predicts that it will continue to be a challenging landscape for businesses:

“I feel the ATO is going to continue to increase their collection activity, making the tax debt management space all the more important for business to be on top of.”

Businesses need to be prepared for a faster pace of decision-making and actions as the ATO continues to deliver on its Collection campaign.

Top 3 Tips for Business Owners Facing Tax Debt

Tom offers three key pieces of advice for business owners dealing with tax debt:

1. “Do not bury your head in the sand — engage with the ATO immediately.”

2. “Ensure all your lodgements are in, even if you can’t pay the total debt right away.”

3. “Seek the assistance of your accountant, and if they’re unable to help, contact a tax debt specialist such as Tax Assure.”

Ready to Take Action?

At Tax Assure, we’re experts in tax debt negotiation. If you’re concerned about your business’s tax debt and need help navigating ATO challenges, don’t wait until the situation escalates. Contact Tax Assure today to explore tailored solutions and get expert guidance on managing your tax debt effectively.