Talking Cents

Small business accountant in Sydney: all you need to know about ATO

As small business accountants we are frequently dealing with the ATO and in particular requesting payment arrangements for clients that are having short-term cash flow difficulties. We have noticed an increase in the ATO's enforcement activity in recent months, which all small businesses need to be aware of.

Now with the ATO now being owed in the order or $20 billion in unpaid taxes, it seems that the ATO are sending a clear message that they will increase their activities to identify and recover unpaid taxes as well as improve their internal systems to capture more information on the taxpayer and initiate enforcement activities at an earlier stage.

When discussing a payment arrangement for a corporate entity, the ATO have recently started looking into a director's personal compliance history and finances where previously the affairs were considered independently.

The utilisation of grouping provisions when undertaking legal enforcement is also increasing in use by the ATO, so one weak business could easily bring down an associated stronger business.

We have also seen an increase in the use of the ATO's other powers to recover outstanding amounts, which include Garnishee notices and Director's penalty notices.

The below graph highlights the number of cases the ATO is now taking to liquidation and bankruptcy as a method of last resort to recover unpaid taxes.

ATO Federal Court winding up application Dec 14 to May 15

Clearly the message here is for all small businesses to keep a close watch on their cash flow, keep in constant communication with their accountant and always seek to keep their ATO account up to date. If you do need to enter into an arrangement it is essential that you do not default on that arrangement. In seeking further arrangements the ATO will always refer to your history and prior defaults make it much harder to negotiate with the ATO.

If you are having trouble meeting your ATO debts don’t hesitate to get in touch with us here at mas accountants, the original accountants for small business, with offices in Sydney and Melbourne.