| As we move quickly towards the end of another financial year, the ATO is in the process of ramping up its collection activities through a variety of methods. In a recent address, the ATO Tax Commissioner indicated that almost two-thirds of the $50bn in uncollected debt owed relates to small business, with an overwhelming majority of this being unpaid GST and PAYG Withholding. We have seen a significant rise in demand notices received by our office, and we anticipate further aggressive enforcement action to collect outstanding debts, which will continue to place stress on many Australian businesses. In our experience, the ATO has come into 2024 with a very different approach to debt collection than in recent years, making it important to keep up to date with lodgement and payment deadlines. In the event you are unable to meet your obligations, having a payment plan in place is often a good way to mitigate the ATO taking further action – however payment plans do come with the condition of ensuring all future debts are paid in full, along with the historical debt that is under the payment plan. Having a solid cash flow plan is critical! We have summarised below some of the more serious notices that can be sent by the ATO: Statutory Demand The ATO can issue a statutory demand to a company that has not paid its debts. This requires the company to pay the entire debt or enter into a payment plan with the ATO within 21 days. Garnishee Notices The ATO can issue a garnishee notice to an organisation that holds money for you. This requires them to pay your money directly to the ATO to reduce your debt. For businesses, this garnishee notice is typically issued to your bank, who are then under an obligation to pay your ATO debt. Director Penalty Notice (DPN) Director Penalty Notices result in the director of a company potentially becoming personally liable for a company’s unpaid GST, PAYG Withholding, and Superannuation Guarantee Charge. This gives the company a short timeframe (usually 21 days) to act to avoid the director becoming personally liable for the debt. The Southern Summit team are here to assist with any challenges you may face. If you have any questions in relation to outstanding ATO debts, or the ATO’s collection methods, please reach out to your client relationship manager. |
