Unpaid taxes with the ATO may be a disaster
The Australian Taxation Office (ATO) is a non-corporate Commonwealth entity within the Treasury office that is charged for tax collection and remittance to the government. It serves four ministers that include the Treasurer, Minister for Revenue and Financial Services, Minister for Small Business, and the Assistant Minister to the Treasurer.
By law, it is required that you pay tax related to your job or business. Where you can’t pay on time, the ATO can still help, but you’ll have to submit your activity statements and tax returns on time to avoid receiving a penalty for late submission.
We answer some common questions:
What if I am affected by a disaster or hardship that could hamper my ability to pay?
The ATO will work alongside you to help sort out your situation. Someone that is under serious hardship e.g. an inability to have food or accommodation for his/her family may be released from some or all of their debt.
Likewise, those that have hardship arising from compulsory Higher Education Loan Programme (HELP) or Student Financial Supplement Scheme (SFSS) – they can have it deferred if they apply.
Does the ATO help businesses stay on top of their tax requirements?
Yes, there are online resources and services designed to do just that. In fact, small businesses can take advantage of interest-free payment plans for their activity statement debts where they can pay it off interest-free within 12 months.
Are there consequences for not paying on time?
Defaulters who don’t pay the money they owe on time will be charged with interest on such amounts, contacted on a regular basis (either through SMS, letters, phone, or messages in myGov), pay amounts they owe using future refunds or credits, may face aggressive debt collection from external collection agencies working for ATO, or may face a stronger action when they fail to address their debt.
Based on the above, it is imperative to note the following:
- A general interest charge (GIC) will automatically be added to what you owe which is compounded as it grows each day
- Your interest rate can be reduced or cancelled if you phone or write to the ATO and explain the reason for your delay in payment
- If the ATO owes you a refund or credit from a previous tax return, the law permits them to use that to reduce any outstanding debts you have
- The external agencies that work for the ATO use particular codes referenced from the ATO and operates under government privacy and security requirements
- The stronger actions you could face include a garnishee notice or director penalty notice. A legal action in-form of a claim or summons, bankruptcy notice, creditor’s petition, statutory demand, or wind-up action can also be instituted against you or your company.
For more information, visit the Australian Tax Office right here
Need help? Talk to your trusted bookkeeper, registered tax agent or accountant!
It may feel very stressful to be in such a situation. If you are not sure what to do, or how to approach the ATO, we recommend speaking to your local accountant, bookkeeper or registered tax agent.