The Australian Taxation Office (ATO) has a range of strategies to help businesses that are struggling with collectable debt and says those businesses who have tax debt should seek advice on their options.

The Shout contacted the ATO following a number of craft breweries going into administration, with ATO debt listed as some of their biggest debts. During the Covid-19 pandemic, the ATO allowed brewers to defer excise tax payments, but Hawkers Founder and Managing Director Mazen Hajjar, told The Shout that its ATO debt was one of the reasons for the brewery entering administration last month.

“So far, we have been able to restructure and fix ourselves so that we have a more sustainable, profitable position. We’re up to date with all our suppliers and all of our taxes are up to date, except the excise tax. The ATO wants us to come to a payment agreement, and it is just unwilling to give us the space and time to pay back the debt,” Hajjar said.

While not commenting on the Hawkers case, a spokesperson for the ATO told The Shout that addressing growing collectable debt remains an area of focus for the ATO and that small businesses continue to be overrepresented in our debt book.

“Most of the collectable debt owed by businesses is self-reported business activity statement debt comprised of tax withheld from salary and wages, GST, and income tax on profits,” the ATO spokesperson said.

“Whilst we understand some taxpayers are having difficulty paying on time and we take a supportive approach to help these taxpayers get back on track, we also see an increasing proportion of small businesses who have capacity to pay but are choosing not to.

“Taxes pay for the services and support that everyone in Australia benefits from. Paying tax in Australia is not optional and our job is to ensure everyone pays the right amount, to the benefit of all Australians.”

They added: “The ATO has a range of targeted strategies to address the growth in collectable debt. This includes a renewed focus on legal recovery actions such as court-imposed liquidation if a debt remains unpaid. Businesses cannot use monies held for employee entitlements to manage their day-to-day cashflow.

“The ATO will take action to ensure these businesses do not get an unfair financial advantage and to protect other creditors and employee entitlements. Although the ATO is often a major creditor it is only a minor initiator of insolvency. The majority of wind ups are either self-initiated or initiated by creditors other than the ATO.

“However, we do reserve help and assistance for those who genuinely need it, including payment plans and General Interest Charge remissions where appropriate. Those businesses who are struggling to recover from debts accrued during COVID should seek advice on their options going forward, including insolvency options, for example genuinely viable small businesses may be eligible for small business restructuring.

“Our emphasis is on keeping small businesses engaged, getting them to lodge so they know their position, and supporting them to set up a payment plan tailored to their circumstances if they can’t pay on time.”

It’s an ATO standpoint that was called out by Former Commissioner of Taxation, Chris Jordan AO, in his address to the National Press Club of Australia last month, just a few days before he left the position.

He said: “Post-COVID, we’ve seen a rise in fraud and debt. Increasing safeguards and resetting our debt collection approach are not always popular decisions, however I am unapologetic about our focus. We have a job to do.

“When you pay GST to a store or see the tax taken on your payslip, you rightfully expect this has been paid on to the ATO. Likewise, you expect your super has been paid to your super fund. Some businesses are telling us that they’ve collected GST and withheld tax from your wages and promised to pay super but they haven’t paid it on. We cannot allow that to stand, especially super for their employees. I think you and the community would agree that we cannot allow people to live off money that’s not theirs.”

The ATO website has a range of support options to help small businesses with tax debts, which do include payment plans and additional time to pay.

The ATO spokesperson told The Shout: “We encourage taxpayers who need help or more time to pay to reach out to the ATO or their tax professional early to discuss their situation.”

Andy Young

Andy joined Intermedia as Editor of The Shout in 2015, writing news on a daily basis and also writing features for National Liquor News. Now Managing Editor of both The Shout and Bars and Clubs.

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