Small business lodgement penalty amnesty deadline

Posted on 18 December 2023 | by Allan Hall

Clock ticking on small business lodgement penalty amnesty

Small businesses have until the end of December 2023 to get back on track with overdue forms via the small business lodgement penalty amnesty.

Late lodgement penalties will be remitted under the amnesty which ends on 31 December 2023 for small business income tax returns, fringe benefits tax (FBT) returns and business activity statements (BAS) originally due between 1 December 2019 and 28 February 2022.

More than 14,000 small businesses have taken advantage of the amnesty since it kicked off on 1 June 2023, with more than $48 million in failure to lodge (FTL) penalties remitted.

Directors who bring their company lodgements up to date can also have FTL penalties remitted if they rely on company lodgements to finalise their tax affairs. This applies to eligible lodgments made between 1 June and 31 December 2023.

The amnesty provides an opportunity for small businesses to re-engage with their tax affairs and get back on track with their lodgement obligations without penalties.

If a small business has ceased trading, they need to advise their registered tax professional or contact the ATO directly to seek assistance with finalising their tax obligations, which may include lodging overdue returns, cancelling their ABN and paying any amounts overdue.

While penalties will be remitted under the amnesty, if a business finds themselves with a tax debt after their overdue forms are lodged, they must pay in full to avoid further interest charges or check the ATO website to see if they are eligible for a payment plan.

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Business debt on ATO’s watchlist

Posted on 18 September 2023 | by Allan Hall

The five types of business debt at the top of the tax office’s watchlist

The Australian Taxation Office (ATO) has unveiled the top five categories of business debt that have captured its attention, signalling the end of the unprecedented leniency extended to late payers during the COVID-19 lockdowns.

Speaking at the Tax Institute Tax Summit in Melbourne, Vivek Chaudhary, the ATO’s deputy commissioner of lodge and pay, emphasised the necessity of offering substantial support to taxpayers, including small businesses, amidst lockdowns and stringent public health measures.

The ATO’s arsenal during the pandemic included payment plans, deferred deadlines, waived penalties and interest, and the option to file without immediate payment, all aimed at aiding businesses during challenging times. Chaudhary acknowledged the positive outcomes of these measures but also pointed out their impact on payment behaviour, with an increasing number of businesses failing to meet tax deadlines compared to the pre-pandemic period.

Chaudhary identified five priority payment categories where the ATO’s renewed focus will be most evident:

Topping the list is the unpaid Superannuation Guarantee Charge (SGC), a penalty imposed on businesses that fail to fulfil their Superannuation Guarantee obligations. Notably, small businesses owe the majority of this debt, totalling $1.8 billion. To ensure compliance, the ATO has equipped itself with tools such as garnishee notices, payment directives, Director Penalty Notices, and potential legal actions to secure SGC payments.
Chaudhary expressed concerns about new self-assessed debts raised by employers, suggesting that taxpayers might be waiting for the ATO to prompt payment before taking action.
Refund fraud remains a significant worry, with fraudsters siphoning billions of dollars from the tax system through counterfeit GST refunds.
The ATO is also monitoring substantial aged debts exceeding $100,000, and
Debts arising from audit actions initiated by the ATO. Chaudhary emphasised that while some audit adjustments stem from genuine errors, others result from negligence, recklessness, or deliberate attempts to evade tax payments, and such cases will receive no leniency, with heightened expectations for debt settlement.

Consequently, the ATO is reverting to its pre-pandemic compliance strategies to transition from the COVID-induced payment culture to a more standard payment approach. ATO commissioner Chris Jordan revealed that the ATO is pursuing approximately $50.2 billion in collectable debt, with small businesses accountable for over $33 billion of this total.

Read the full speech Addressing collectable tax debt – Tax Institute’s Tax Summit 2023 here »

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Director penalty notices

Posted on 23 May 2022 | by Allan Hall

ATO follow up of unmet PAYG withholding, Superannuation Guarantee Charge and GST

In March the ATO started contacting company directors to inform them about their potential personal liability for company tax debts under the Director Penalty Notice (DPN) program.

A letter is being sent to directors of companies if the company has not met their debt obligations in respect of PAYG withholding, Superannuation Guarantee Charge and GST.

Directors will be notified that the ATO is considering issuing them with a DPN, which makes them personally liable for the debts of their business if the company does not actively manage their debt.

The focus is on making directors aware of their obligations and personal liabilities, and the actions that may be taken if they don’t engage. Clear pathways will be provided to re-engage, work with the ATO and avoid escalation.

There is information on the ATO website for help with paying and support in difficult times. It is crucial that directors engage with the ATO early before any debts become unmanageable.

Directors can access the ATO’s payment plan estimator to work out an affordable plan.

Generally, while there is a debt, general interest charges continue to apply so make sure all lodgments are bought up to date to avoid further penalties.

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