Are you struggling to pay the tax obligations and super contributions of your small business? If so, you can get support from the ATO under certain circumstances to overcome the tough times.
Small businesses and even large companies might struggle to fulfill their tax obligations toward the government every now and then.
Don’t worry. This article will educate you about the support you can expect from the ATO to manage difficult times.
In what situations does ATO give support
Your business can face difficulties due to various reasons. However, ATO will not consider every financial hardship faced by the business.
These circumstances must be genuine and cause financial difficulties for the business. Such situations can be:
- Closing the business.
- Taking back a vehicle that is used for business purposes.
- Disruption to an essential service such as electricity.
- Period of review limitations.
- Pending legal action for non-payment of debts.
- Court orders.
- Other necessities for the business or people you are responsible for.
If you face a difficulty due to some other reason, contact the ATO and ask whether they provide support for such circumstances.
Should you provide evidence to prove your circumstances
Yes. You must provide evidence to prove that your situation is genuine and you need support from the ATO.
This is crucial, and you must have the necessary documents to prove your situation beyond any doubt. Therefore keep all the valuable and essential records with you. You never know when they will become helpful.
What are the evidences considered by the ATO to prove your situation?
You must provide evidence from reliable sources when proving your situation to ATO. Not all evidence will be considered proof. The evidences as given by the ATO may include:
- A current bank notice.
- An eviction notice.
- A repossession notice.
- Other bank notices (for example, an overdraft call).
- A disconnection notice.
- Contract payment schedules.
- Staff pay records.
- Legal documents.
- A notice of impending legal action.
ATO might consider several factors when assessing your claim. They also state that sometimes the requirements might change depending on your circumstance.
How does ATO support your business during difficult times
ATO will carefully analyze the evidence you provide and decide what kind of support is suitable for your business. These are the most common ways that the ATO will support your business.
1. Priority processing the tax returns
You can request the ATO to process your tax return faster. ATO will consider the business’s financial difficulties and take steps to pay your tax credits more quickly.
ATO also states that priority processing will not always guarantee a cash refund. If your business has any tax dues and obligations to other government agencies, then the credits will be used to pay such outstanding amounts first.
You can also apply for priority processing through fax or a tax professional.
2. Adjust the GST registration and reporting
If your business is has a GST turnover of less than $75,000 (less than $150,000 for non-profit organizations), then the ATO will:
∙ Allow you to cancel your GST registration. The fuel tax credit, wine equalization tax and luxury car tax registrations will also be cancelled.
∙ Allow you to remain registered and amend your payment cycle to pay you GST annually or monthly.
∙ You can also continue with the current reporting option and registration if you prefer.
3. Arrange a payment plan
ATO will allow you to propose a payment plan if you owe less than $100,000 to them. You can apply for a payment plan through
- Through their online services.
- Through your BAS agent or a registered tax agent.
- By calling ATO’s automated phone service on 13 72 26 which is available 24 hours a day.
4. Vary your PAYG installments
If your business pays Pay As You Go (PAYG), ATO will allow differing rates or amounts you pay for the current income year.
If your business faces financial difficulty, you can declare that in the next BAS or the installment notice.
ATO will consider your situation and allow you to maintain the varied rate for all installments in the given income year until you make another variation.
5. Assists to pay the super contribution on time
You are legally bound to pay the super contributions on time or a super guarantee charge for the late payments.
As you know, the super guarantee charge will include an interest and an administration fee which would increase the total amount of the super charge compared to the super contribution.
ATO cannot legally waive off these contributions or the charges. However, ATO suggests to submit a Superannuation guarantee charge statement within a month of the quarterly due date. This will help to avoid additional penalties. If you can’t pay in full, ATO will work with you to set up a payment plan.
6. Assists when funds are frozen
If your funds are frozen and you can’t pay the tax obligations, you may be allowed to pay the taxes in installments.
The Australian Securities & Investment Commission (ASIC) can help people with frozen funds and financial difficulty.
Should you get financial advice to manage the business
When you identify that your business will face financial difficulties in the future, you must make immediate plans to manage the funds wisely. If you don’t have the experience to allocate your finances properly, you can consult a professional for help.
Our team at SPS has the experience and expertise to help you in difficult situations. We are professional tax consultants, and we have helped many clients to overcome their financial difficulties over the past years. Don’t hesitate to contact us at (03)-99049261 at your earliest convenience.
Let’s work together and overcome financial hardships.