January ATO Blitz On Debt

An alignment of circumstances seems to increasingly point to a major move on SME debt by the ATO in the New Year.

A Perfect Storm?

It is no secret that both the ATO and the Federal Government were embarrassed by the recent release of data showing that Small/Medium Enterprise sector tax debt continues to increase from what were already record levels. The ATO had made it clear that this was a major policy target for 2018 and they appear to have failed dismally. With an election due within twelve months, the Liberal National coalition cannot be seen to go lightly on the subject of business debt.

In themselves, the above facts are fairly strong. Now we hear that there has been a substantial cancellation of January staff leave at the ATO. We were left in little doubt that there will be a major push on debt first thing in the New Year.

Be warned that when the ATO has a major campaign a lot of the usual procedures are bypassed and/or timeframes compressed. E.g. there may normally be five steps in the ATO collection process that can be applied over several months. In a push of this nature they may allow only a week between the steps and/or bypass some steps entirely.

What can I do?

If you have debt that is not in a payment arrangement, act immediately to get it in an arrangement.

If you have a payment arrangement, make sure you keep it to the letter.

What is the most severe action that the ATO can take?

We expect to see simultaneous issue of Director Penalty Notices and Statutory Demands fairly quickly if the ATO cannot get a satisfactory payment arrangement in place. Almost certainly they will have little tolerance for taxpayers who fail to keep payment arrangements to the satisfaction of the ATO. Ultimately, these actions will lead the winding up of companies and legal recovery action against Directors personally if swift steps are not taken.

Once issued, you have 21 days to act. After that you will have little if any ability to influence matters.

Action List

1. Ensure the address of Directors is current. The ATO’s responsibility is to send a Director Penalty Notice to the address registered with ASIC. If a DPN is not received (and therefore not acted upon) you could end up owning the company or trust debt personally and irrevocably.

2. Put debt into a payment arrangement as soon as possible.

3. Keep strictly to existing payment arrangements.

4. If you receive a Directors Penalty Notice or a Statutory Demand, act immediately.

If you have any questions on the above matter, please call Warren Maris directly on 07 3483 0102.

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