Every person I know hates paying tax, and even more dealing with the Australian Tax Office (ATO). Accountants – well some can be guilty by association.
As someone who has worked in accounting practices or as a registered BAS agent for 15 years, I can tell you they are not the bounty hunter many people think they are. Every year the ATO releases their Mission and Value Statement that highlights the focus and mechanisms made available to help us small business owners. A recent newsletter for small business released by the ATO called the “Small Business Newsroom” lists due dates and provides practical jargon free information about changes and events which affect us as small business owners. From the outside, this newsroom appears to be relevant and informative. The evidence of success will be in the number of people who use it as a resource.
For many years the ATO have taken a much softer approach with those individuals and businesses who try to be compliant. Believe it or not, sometimes you just can’t meet your obligations (illnesses, technical glitches, and financial reasons) and for many the fear of fines, penalties or worse can cause severe anxiety.
Firstly, a fine or interest against your name does not put you on a “Naughty List”. Unless you or your accountant or BAS agent are a repeat offender with substantial debts, a fine or interest is just that – a financial pain in the butt.
Secondly, if you follow the tips below, you can generally reduce the likely-hood and severity of penalties or fines for ate lodgement:
• The lodgement and payment of your BAS’s are separate processes as far as the ATO are concerned. If you can’t do one, attempt the other. E.g.: Lodge your BAS even if you can’t pay it. The ATO will likely grant you a payment plan.
• If you can’t lodge your BAS, make an estimate and pay it. Any over payments will be refunded but you will avoid penalties and interest. Alternatively, lodge an estimate and then amend it when you know the final outcome.
• If you know you are going to be delayed, call before the due date, as proactive tax payers get a much more favorable response.
• Put in place procedures to avoid the same circumstances again and tell the ATO what you have done. Again, proactive tax payers get a favorable response.
You will notice a common theme here – try to do the right thing and if it goes south, don’t stress just ask for help!
The ATO can also be fearsome when it comes to debts and debt collection, however consistent with the theme they reward proactive behavior in the following ways:
• Small debts that accrue smaller amounts of interest are automatically remitted,
• The ATO are generally happy to accept payment plans as long as you keep to them,
• Once payment plans are completed any interest and fines can be reviewed and possible remitted,
• Debt collectors are only engaged when there is no contact with the ATO. Even if you can’t make the required payments, if you inform the ATO you can avoid debt collectors being engaged and therefore you will avoid getting an adverse credit rating or further.
The biggest lesson here is to ACT before it gets too bad as there are options for you. Debts which get overwhelming really require qualified financial advice, but act soon and you will be much better off.
Some good resources to get help include your accountant, a registered BAS agent and by phone and email to the Australian Tax Office.