The ATO has announced that it will be more strict in providing delinquent taxpayers access to payment plans.
Under its new policy, taxpayers will now need to prove they have the capacity to pay the tax debt, with an emphasis on the taxpayer paying off the tax debt as early as possible.
The announcement comes in the wake of the recent changes to tax collection methods made by the Federal Government as part of the MYEFO announcement.
Chartered Accountants ANZ (CA ANZ) believes with this new policy could see small businesses facing unforeseen pain.
“With more than $95 billion in tax debt to collect, it is not surprising that attention is being given to the collection of that debt,” CA ANZ Senior Tax Advocate, Susan Franks CA said. “Small businesses can have difficulty accessing finance from traditional financial service providers.
“With the general interest charge approximating the small-business interest rate charged by banks, small businesses have found it easier to apply for finance in the form of a payment plan with the ATO than a loan from a bank,” Franks added. “This is evidenced by small business owing most of the outstanding collectible debt.
“Denying deductibility of the general interest charge will effectively increase the cost of accessing finance with the ATO and make obtaining external finance more attractive,” she continued. “The days of the ATO being the banker for small business are numbered. Small businesses should talk to their Chartered Accountant about their cashflow and financing to ensure that they can pay their tax on time.”
