Small and medium businesses owe $21 billion to the ATO, according to new data compiled by the Inspector-General of Taxation and Taxation Ombudsman (IGTO). But despite this record figure, a vast majority of small business owners are said to be doing the right thing.
In fact, according to the Australia Small Business and Family Enterprise Ombudsman, Bruce Billson, over half of this collectable debt is held by just 6.4 per cent of SMEs.
“This report shows that while collectable debt owed by small businesses to the ATO has reached an all-time high, in reality the breakdown sees the majority of debt 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,” Mr Billson explained.
“In fact, less that one per cent of small businesses owe $2.5 billion to the ATO, according to the IGTO’s report.”
However, what is cause for concern is the reported decline in small business payment plan arrangements over the past three years.
“For those small businesses that are struggling to meet their tax obligations, now is not the time to put your head in the sand,” Mr Billson said.
He urged businesses to lodge now and reach out to the ATO for a tailored payment plan if having difficulties meeting payment obligations. And while the ATO is signalling plans to return to collective action, its predominant strategy will remain supporting and assisting small businesses wherever possible.
“The ATO has told my office it is also introducing a system for payment plans in arrears to give small and family businesses a chance to get back on track rather than falling into default and having to start again,” Mr Billson said.
“The ATO has acted on key recommendations in ASBFEO’s report: a tax system that works for small business to turn its small business independent review service into a permanent offering.
“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.”