Small Business Ombudsman: It’s time to talk tax

With the events unfolding right now, you could be forgiven for forgetting it is the end of the financial year.writes Bruce Billson, Australian Small Business and Family Enterprise Ombudsman.

It’s really important to be proactive at tax time – no matter how difficult the past 12 months have been on your small or family business.

Most business owners do the right thing at tax time

A new report from the Inspector General of Taxation and Taxation Ombudsman (IGTO), shows that although small and medium businesses owe $21 billion to the ATO – well over half of this collectible debt is held by just 6.4% of businesses.

We know the vast majority of small business owners are doing the right thing and complying with their tax obligations.

This IGTO 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.

The report also highlights a concerning decline in small business payment plan arrangements over the past three years.

Owe tax – make a payment plan

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

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 has told my office it is also 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.

There is help if you need it

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.

Small businesses engaged in a tax dispute are encouraged to contact my office for assistance on 1300 650 460 or email info@asbfeo.gov.au

Finally, it was World Medium and Small Enterprise Day on June 27, and I want to take this opportunity to thank all small and family businesses for your vital contribution to Australia’s prosperity, wellbeing and community. The past 18 months have been incredibly challenging for small businesses, but I have been inspired by the courage, resilience and agility shown by the small business community. More than ever we have seen the deep personal commitment it takes to run a small business and I thank you all for your hard work, determination and fighting spirit.

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