The Australian Taxation Office (ATO) is ending its lenient approach to small business debt collection, according to Commissioner Chris Jordan. In a speech to the Institute of Public Accountants, Jordan emphasised the shift from pandemic-era leniency to an active debt collection strategy over the past 18 months. The ATO, facing a $50 billion collectable debt, has issued 31,000 Director Penalty Notices and is prioritising the recovery of debts held mainly by small businesses. 
 Small businesses with overdue payments are urged to utilise the Failure to Lodge penalty amnesty, expiring on December 31, or face strong and deliberate action from the ATO. 

Attention Small Business Owners: The ATO is Cracking Down on Tax Debt

Returning to its pre-pandemic debt collection strategy the ATO is warning businesses with tax debts exceeding $100,000 and that are more than 90 days overdue are now at risk of having their debt disclosed.

The ATO expects to disclose the debts of 9,000 Australian businesses in October alone, and over 50,000 across the 2023-24 financial year.

The ATO’s crackdown on tax debt is a challenge for small businesses, which are already struggling with rising costs and supply chain issues. A disclosed debt can make it harder for businesses to get credit and find suppliers. In June 2022,  only 1% of Australian businesses reported having no supply chain issues.

The Australian Small Business Report 2022, found the majority of Australian small businesses are already feeling the pressure or are concerned about the rising costs associated with running a business.



Small businesses with overdue payments are urged to utilise the Failure to Lodge penalty amnesty, expiring on December 31, or face strong and deliberate action from the ATO. 

What is the Failure to Lodge Penalty Amnesty?

The Failure to Lodge Penalty Amnesty is a temporary initiative by the Australian Taxation Office (ATO) aimed at encouraging businesses to address their overdue lodgements without facing the usual penalties. The amnesty provides businesses with an opportunity to catch up on their outstanding lodgements, such as tax returns and other required documents, without incurring the usual financial penalties that would be imposed for late submissions. 



During the amnesty period, eligible businesses have the chance to rectify their compliance issues and bring their lodgements up to date. It’s essentially a grace period during which the ATO offers more lenient terms to encourage businesses to fulfil their obligations without the added burden of penalties. 

How do I check if my business has tax debt?

To check your tax status, you need to go to the right website. If you’re a sole trader, go to myGov. If you’re a small to medium business, go to the ATO’s Online Services for Business portal. 



Once you’re on the right website, you’ll be able to see how much tax you owe, if any, and get help if you need it. 

My business has tax debt, what should I do?

Don’t worry, there are things you can do to avoid this happening. If you have a tax debt, the most important thing is to contact the ATO immediately. They may be able to help you set up a payment plan or make other arrangements. 

Top 5 Tips for Small Business Owners

1.Regularly check your tax obligations.

Ensure you are aware of all the taxes you need to pay and when they are due. You can find this information on the Australian Taxation Office (ATO) website. It’s important to note that your tax obligations may vary depending on your business structure and industry.

2.Keep accurate records.

Good record keeping is essential for any business, but it’s especially important for small businesses that are managing their own taxes. Accurate records will make it easier to lodge your tax returns and pay your taxes correctly. The ATO has a range of resources to help you keep accurate records, including record-keeping templates and checklists. 

3.If you are struggling to pay your taxes, contact the ATO immediately.

If you’re having trouble paying your taxes, the ATO may be able to help you set up a payment plan or make other arrangements. There are a number of different payment plan options available for small businesses. To discuss your payment plan options, contact the ATO.

4.Don’t ignore the ATO’s warning.

If you have a tax debt, the ATO will send you a warning letter. This letter will outline your debt and the options available to you. It’s important to take action immediately if you receive a warning letter from the ATO. If you don’t, the ATO may take further action, such as garnishing your wages, seizing your assets, and disclosing your debt to the public.

5.Engage a reliable accountant!

If you’re not sure how to manage your own taxes, it’s a good idea to engage a reliable accountant. An accountant can help you with a range of tax tasks, including lodging your tax returns, calculating your tax liability, paying your taxes and advising you on tax minimisation strategies. You can find a reliable accountant in your local area using Localsearch.com.au.

Disclaimer:
The information in this article is general information and is not intended to replace professional advice. If you have any specific questions or concerns about your tax debt, you should consult with a qualified tax advisor.