Small Businesses Beware - Keeping an eye on your levels of debt to the ATO
A recent report
highlighted that unpaid ATO debt is soaring and that if companies want to avail
themselves of the Safe Harbour and Small Business Restructuring provisions,
they need to keep their tax arrangements with the ATO in order (i.e. payment
plans in place and Super being paid).
The ATO’s book debt has grown to $45 billion and $15 billion of the total debt is due from small business.
The ATO figures show the level of undisputed debt grew in each of the past four financial years, with unpaid amounts from the nation's 2 million small businesses making up 63 per cent of the total.
The amounts owed highlight that many small businesses are doing it tough and are only able to continue operating through the indulgence of the ATO.
Whilst the ATO has been slow to pursue collection of their outstanding debts during the Covid-19 moratorium period (March 2020 to December 2020) it is anticipated that the ATO will commence pursuing the outstanding debts in 2021.
With government assistance programs resulting in record levels of government debt, pressure will mount on the ATO to collect the outstanding amounts.
Directors concerned about their circumstances should talk to HPL now to make sure that when the insolvent trading and debt collection reliefs expire on 31 December 2020, they are best placed to deal with the build up of creditors that the COVID situation has created.