ASBFEO urges small businesses to be proactive about their tax returns

The Australian Small Business and Family Enterprise Ombudsman Bruce Billson has urged struggling small and family businesses to be proactive this tax time in the midst of declining payment plans despite record collectible debt owed to the Australian Taxation Office (ATO).

This comes on the heels of a recent report by the Inspector General of Taxation and Taxation Ombudsman (IGTO), which says that although SMEs owe $21 billion to the ATO – well over half of this collectible debt is held by just 6.4 per cent of SMEs.

“The vast majority of small-business owners are doing the right thing and complying with their tax obligations,” Billson said. “This report shows that while collectible 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 two million SMEs. In fact, less that one per cent of small businesses owe $2.5 billion to the ATO, according to the IGTO’s report.”

Billson also noted that the reported decline in small business payment plan arrangements over the past three years is a concern.

“For those small businesses that are struggling to meet their tax obligations, now is not the time to put your head in the sand,” Billson 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 is reportedly 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.

“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 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,” Billson concluded.