The ATO Commence Active Debt Collection

February 16th, 2022

In response to the crippling economic impact of COVID-19 in 2020, the Australian Taxation Office (ATO) deferred the collection of tax debts to move their focus to support businesses with their cash flow. But now, as the economy starts to improve, it’s important for business owners to remember that their tax debts were deferred and not eliminated.

ATO commence active collection of tax debt

The ATO has been chasing businesses and accountants for news on the payment status of business tax debts. The increased pressure on businesses, plus a recent recruitment campaign undertaken by the ATO, suggests they are gearing up for active collection of tax debts, and this time they mean 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 businesses regarding the future of their business.

Face your tax debts head-on

Running from tax debt is no longer an option. But don’t worry, there are much more effective options available. 

A large tax debt may seem as though it could be the end for your business, but winding up your company or declaring bankruptcy are not the answer. Olga Koskie from Tax Assure says, “there is help out there. Don’t give up, you just need to get the right help”. Tax Assure uses decades of experience to tailor and present innovative resolution proposals to the ATO on behalf of businesses struggling with tax debt. This proposal includes a tax debt repayment plan and overall debt reduction strategy expertly crafted to suit the financial needs of the business. So business owners can repay the ATO under terms that work for their business longevity, while getting on top of any other debt that’s gotten away from them

How to ensure you’re not reported to credit bureaus

The ATO has the power to report businesses with tax debts that have passed 90 days and are over $100,000. 

To avoid being reported to credit reporting agencies, the business simply needs to be engaging with the ATO to manage the tax debt. 

“Engaging with the ATO” doesn’t mean having the receptionist call the ATO to let them know the debt will be repaid — it’s a bit more involved than that. Consulting an expert such as Tax Assure meets the ATO’s definition of engagement and comes with the added benefit of a tailored repayment plan, reduction of overall tax debt, and an expert on your side to help manage the process.  

Engaging a tax debt negotiation specialist to help reduce overall tax debt and present a payment plan to the ATO ensures you’re getting the right kind of help and keep the ATO at bay by undertaking the right kind of active engagement. A payment plan created by a tax debt negotiation professional keeps everyone happy; the ATO are happy because they’re getting repaid, and the business is happy because it allows them the flexibility and control they need to effectively repay the debt under terms that suit them.

    Making tax debt repayments easier

    For the best results, business owners must be proactive and get on the front foot as soon as possible.

    Some options for managing tax debt include:

    1. Engage with the ATO and organise a payment plan. Consulting a tax debt negotiation specialist to help develop and present a repayment plan to the ATO will be invaluable in helping you reduce overall tax debt. 
    2. Boost your cash flow. Managing cash flow is critical when keeping up with debt repayment obligations. Inconsistent cash flow continues to be a major pressure point for businesses, contributing to issues such as:

    a) Rising tax debt (and other forms of debt).

    b) Supply chain issues

    c) Customers not paying their invoices on time.

    Cash flow can be managed with:

    • Government Assistance programs such as the SME Recovery Loan Scheme 

    The SME Recovery Loan Scheme is designed to help small to medium-sized businesses recover from the ongoing effects of COVID-19 with affordable business finance. Earlypay is a proud participant, 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 their customer has paid. 

    Benefits of Earlypay’s SME Recovery Loan Scheme:

    1. Finance from  $50k to $5m

    2. No real estate security

    3. No minimum trading history

    4. Approval as quick as 24 hours

    5. Can support businesses of all shapes and sizes

    6. Can support businesses with ATO Debt

    • Sale-back Asset Finance

    Sale-back Finance allows you to unlock equity in assets you already own. It can be an effective tool for unlocking capital and accessing cash when you need it most — and can be used for things like making repayments to the ATO!

    How Tax Assure and Earlypay together can help businesses pay down debt

    1. Optimise debt position. 
    2. Negotiate with ATO on debt options — payouts,repayment plans and debt reduction strategies.
    3. Reduce overall ATO debt.
    4. Provide flexible finance options (SME Recovery Loan Scheme and Sale-Back Finance).
    5. Facilitate cash flow to support growth.

    Find out more about how Earlypay can help you manage cash flow to repay debt.

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