The ATO (Australian Taxation Office) has put small businesses on notice that it intends to collect unpaid tax debts and crack down on tax evasion.
ATO second commissioner Jeremy Hirschhorn said small businesses were responsible for 65% of the $37 billion in collectible (i.e. not disputed) debt.
Mr Hirschhorn said that while the ATO took a relatively relaxed attitude to debt collection during the pandemic, it had “resumed stronger actions and intends to collect tax debt for taxpayers resistant to managing their debts and engaging with the ATO”.
Small businesses that are struggling to pay their taxes should approach the ATO as early as possible, according to Mr Hirschhorn.
Also, businesses should never ignore communications from the ATO as “that will raise a red flag”.
Mr Hirschhorn also said that while most small businesses try to do the right thing, there are some that deliberately evade taxes by participating in the shadow economy.
As a result, one of the ATO’s focus areas for the coming year will be to “improve small business tax performance”.
In a real estate point of view, it is highly advisable to not fall behind on tax debt especially if you are applying for finance as it will negatively affect your capacity to repay.
Meanwhile, on a previous post, the federal government has introduced two tax incentives for small businesses. These tax incentives where announced in the March Federal Budget.
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