Australian owners of small- and medium-sized businesses who have outstanding debts to the taxman have been urged by the small business ombudsman to pay up.
More than 60 per cent of this, or $21 billion, is owed by small- and medium-sized (SME) businesses, the report reveals.
And while most Aussie business owners do the right thing, a handful are not: this huge sum is in the hands of just 6.4 per cent of small businesses.
“The majority of debt [is] owed by very few SMEs, while the remainder is very small amounts of debt spread over a small percentage of Australia’s more than 2 million SMEs,” said Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson.
“In fact, less that one per cent of small businesses owe $2.5 billion to the ATO, according to the … report.”
But the number of businesses making payment plan arrangements over the last three years is dropping, even as collectable debt is rising, added Billson, who urged business owners to be proactive at tax time.
“For those small businesses that are struggling to meet their tax obligations, now is not the time to put your head in the sand,” he said.
“Small businesses are strongly encouraged to get on the front foot by lodging now and reaching out to the ATO – either online or by phone – for a tailored payment plan, if having difficulties meeting payment obligations.”
The ATO has advised the ASBFEO that it will introduce a system to assist small and family businesses whose payments are in arrears to get back on track.
“While the ATO is signalling plans to return to collection action, which it relaxed during the pandemic, it has also indicated to my office that its predominant strategy is to support and assist small businesses wherever possible,” Billson said.
The ATO’s small business independent review service, initially a pilot, will now be a permanent service, and can be called upon if a small business being audited by the ATO disagrees with the audit.
“This is in addition to the Australian Government giving the Administrative Appeals Tribunal (AAT) greater powers to pause or change debt recovery action applied to small businesses in dispute with the ATO.”
Are you in debt? Here’s how the ATO can help
The ATO advises business owners to get in touch with them sooner rather than later if they’re unable to pay debts on time.
“We only take firmer action (such as issuing a garnishee) if taxpayers don't deal with their tax debt.”
If you can’t pay your debts on time, you can set up payment plans with the ATO to pay in instalments.
“This will show us you're aware of your obligations and doing your best to meet them.”