INTHEBLACK June 2022 - Magazine - Page 17
In addition to its regular engagement activities, the
ATO has recently written to about 70,000 businesses
under its two key client awareness programs –
Disclosure of Business Tax Debts and the use of
Director Penalty Notices.
The programs are focused on those who have not
responded to the ATO’s calls and letters and have
significant outstanding tax obligations.
Under the Disclosure of Business Tax Debts measure, the
ATO may in certain circumstances disclose a taxpayer’s tax
debt information to credit reporting agencies.
“Disclosing business tax debts is an important action
we’re taking to encourage taxpayers to engage with us
and take action to resolve their debts, help level the
playing field and support businesses to make more
informed decisions on who they provide credit to by
making overdue tax debts more visible,” says the ATO.
“By signalling our intention to make a disclosure, we
hope clients will act on this warning.”
The Director Penalty Notice awareness program
contacts directors of companies that have overdue
amounts in respect of PAYG withholding tax, the
Superannuation Guarantee Charge and GST.
Directors are being advised they may be personally
liable if their company debt is not actively managed.
NEED TO ACT QUICKLY
David Ross CPA, a partner at insolvency and restructuring
firm I & R Advisory, says accountants need to be aware
that if they’re getting such letters on behalf of clients
they need to act quickly.
“The ATO was very accommodating through the
pandemic – which was great – and that certainly saved
a lot of businesses,” Ross says.
“But certainly now they are ramping things up,
particularly against those that aren’t engaging with
them. That’s the major thing.
“The ATO has been sending letters to those that have
not entered into a payment arrangement and engaged
with the ATO and warning they’ll be reported to credit
reporting bureaus,” he confirms.
Ross says the disclosure of business tax debts to
credit reporting agencies is a relatively new tool in the
ATO’s debt collection procedures.
“It affects their credit rating and the business’s ability to
raise funds,” he explains. “The key thing is that you’ve just
got to engage with the ATO. They’re targeting people who
aren’t engaging and who aren’t reporting their debts.”
Dino Del Medico CPA, director of accounting firm
Austens, says the ATO’s tax debt honeymoon period
“DISCLOSING
BUSINESS TAX DEBTS
IS AN IMPORTANT
ACTION WE’RE
TAKING TO
ENCOURAGE
TAXPAYERS TO
ENGAGE WITH US
AND TAKE ACTION
TO RESOLVE THEIR
DEBTS, HELP LEVEL
THE PLAYING FIELD
AND SUPPORT
BUSINESSES
TO MAKE MORE
INFORMED
DECISIONS ON
WHO THEY PROVIDE
CREDIT TO BY
MAKING OVERDUE
TAX DEBTS MORE
VISIBLE.”
THE AUSTRALIAN
TAXATION OFFICE
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TO ACCESS
CPA Australia’s tax
time resources
was always going to come to an end. “They need to
start collecting, just like any other business,” he says. “It
would be fair to say the ATO has the longest debtors list
in the history of Australia.”
WORKING WITH THE ATO
Del Medico warns that any taxpayers with outstanding
debts must manage their tax payments.
“I don’t have a problem if ATO representatives call up
my clients who need to pay their tax, because ultimately
it needs to be paid.
“If the ATO does need to go to them, the taxpayer has
a chance of negotiating a suitable term.”
However, Del Medico says it’s also useful at times for
tax agents and their clients to contact the ATO together
to work out an acceptable repayment solution. This may
even lead to the waiving of penalties and interest.
“I had a client who had quite a substantial six-digit tax
bill, which was paid back over a few years including
penalties and interest,” he says.
“The client was on the phone to the ATO with me and
we were successful in getting back A$64,000 in interest
payments.”
He says tax agents can help their clients by contacting
them and asking if they can pay their tax debts in full or
part.
“If they can’t, the clients need to work out the cash
flow they need monthly and how much payment after
that they can make. I then like to get the client in the
office and call the ATO with them in the room.”
That way, because the client is present, an ATO
representative can determine that there’s a genuine
commitment to the repayment process.
HOW TO MAKE CONTACT
“Taxpayers facing difficulty meeting their obligations
are encouraged to contact us or their registered tax
professional and discuss their circumstances, so we can
provide them with the most appropriate help and
assistance,” says the ATO spokesperson.
“We know that businesses can sometimes have cash
flow issues, which could mean they can’t pay their whole
tax bill on time.
“Those with an activity statement debt may be
eligible for an interest-free payment plan,” the
spokesperson reiterates.
Those with debt under A$100,000 can propose a
payment plan through the ATO’s online services, their
registered tax or BAS agent, or by calling the ATO’s
automated phone service on 13 72 26.
intheblack.cpaaustralia.com.au June 2022 17