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Small Business and ATO Tax Debt

Small Business ATO Tax Debt | Moula Good Business

Tax time is always fun for small businesses! If you’re getting ready to lodge your quarterly BAS then you’ve probably got a heap of questions flying around. What are the GST due dates? How often do I have to pay PAYG? What are the penalties for being late with my BAS?

The Australian Tax Office’s own website is actually pretty clear with all the lodgment dates and contains a lot of useful information on lodging and paying your BAS. You can check out all the lodgment dates here – but just note that these can vary for tax agents.

However, if you’re looking for more information you may have to dig a little deeper. We’ve put together a quick rundown of what to look for if you think you won’t be able to get your tax in on time:

What If You Can't Lodge and Pay On Time?

One of the biggest mistakes a lot of businesses make is thinking that, because they can’t pay, they shouldn’t lodge. This only makes a bad situation worse. There are separate penalties for failing to lodge and failing to pay. However, the ATO (and credit agencies) do look more favourably on businesses that lodge even if they can’t pay immediately – so it is always good practice to lodge on time.

If you can’t lodge or pay by the due date then your best bet is to contact the ATO as soon as you can. Their first requirement will be for you to submit outstanding returns before a payment plan can be arranged. However, you may at least be able to arrange an extension so as not to incur any unnecessary penalties.

The thing to remember here is to be proactive. The ATO isn’t out to get small businesses and can be pretty accommodating to those who are willing to work with them. Getting in early and preventing a problem before it starts is crucial.

Penalties For Not Paying

It’s not in the ATO’s interest to be collecting tax debts to the point where it hurts businesses. That being said, they are definitely coming down much harder on businesses that are racking up and not paying off their tax debt.

If you are able to arrange a payment plan with the ATO, it is important to keep in mind that all subsequent BAS payments are due in full and on time – if you miss this, then the ATO can cancel the payment plan and the full debt becomes due!

Initially, your tax debt will accrue interest (regardless of whether or not you have a payment plan in place) and the ATO will apply any tax refunds you are due to reduce your debt.

Without a payment plan in place, the next step the ATO will take is referring your debt to external collection agencies (think Dun & Bradstreet and Collection House). This is where it can get a bit dangerous for your credit score. (If you want to find out more about exactly what the ATO can do with your tax debt information, read our blog on ATO tax arrears.)

After that, the ATO will probably take stronger action, which could include court notices and legal action. This is a worse case scenario and it rarely gets this far – but still be mindful of how serious things can get if you just ignore the ATO.

How to Handle Your Tax Debt

Aside from getting your tax submissions up to date and keeping on top of your cash flow throughout the year, dealing with existing tax debt can be a bit tough. The ATO do offer payment plans for businesses looking to settle their tax debt, however, these aren’t always suited to SMEs.

Another option is refinancing your tax debt. This is where we come in! Moula specialises in working capital loans for SMEs and offer flexible finance options for small businesses in just these kinds of situations. We’ve already helped heaps of businesses get on top of their tax debt and in control of their cash flow!

If you’d like to refinance your tax debt, you can apply online with no hassle and no paperwork, by clicking here. Or if you’d like to talk to us about how Moula can help, our team would be happy to chat on 1300 88 58 93.


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