TAX CHAT Again06.07.2021
If you have a nagging tax debt, is it time to get in on a solution?
ATO has cut businesses some slack when it comes to recovery, but how long can that last?
Want to make a change – talk to Your business Angels to get team members to help you with a plan.
The COVID-19 pandemic has had a significant impact on the number of receivables collected by the Australian Taxation Office.
To date, the ATO has cut businesses some slack when it comes to its recovery policies. However, they have flagged a policy change, so it is essential to be prepared.
Despite COVID-19 still hampering business, as usual, Australia’s economy is recovering well, with national GDP in the March 2021 quarter rising 1.8 per cent on the previous quarter. The outlook remains strong and supported by the federal government’s fiscal measures and current financial conditions.
An expansionary fiscal budget is providing fuel for that growth, with government debt at historical highs; in simple terms, all the money slashed into the economy through job keeper and other stimulus packages has been shared around – re-spent and fuels the economy (until they get it all back with GST).
They were supporting businesses and helping them get back on their feet after the pandemic has been a vital aim of the federal government over the past 18 months. Part of that strategy is reflected in the ATO’s debt collection practices.
In 2015 the budget recorded around $20 billion in uncollected taxes. By 2020, this had risen by $16 billion to $36 billion – that is about a 75 per cent increase.
Forward estimates (government cashflow planning) show the amount will keep creeping up, albeit more slowly, and that by 2025, there will be an estimated $46 billion in taxes outstanding.
This means over ten years (from 2015), the amount of uncollected taxes on the federal government’s balance sheet is projected to more than double.
We all know the effect if clients won’t pay.
The federal government is yet to come down hard on businesses behind in their taxes, so it’s not surprising the uncollected amount is rising.
What’s happening for you.
At Your Business Angels, considering what we have just been through, we have never had so many compliant clients or clients moving with a plan.
If you do not have a plan, then let us get a plan in place for you.
We have no idea when there will be a game-changer; it appears to have the ATO now chase for money will be a political solution, however it’s more practical, they need the money to run the country, they have handed a lot of money out, sooner or later they want catchup.
The softer options we believe at Your Business Angels are the early plans. The ATO has continued to focus on superannuation, and we think that PAYG debt will be next.
And that is scary because they have statutory power to make the debt yours and not just the company, just like superannuation.
Want to make a change?
Give Your Business Angels a call 1300 982 559.