The Australian Taxation Office (ATO) is the most common business creditor. Dealing with them can be a daunting prospect for company directors. The ATO has expansive powers to collect its tax debts. This can be the start of a long and stressful journey for you and your business. The key to managing your ATO debt is understanding the options that are available to you. To determine the best option for your business, talk to one of our insolvency practitioners today – it’s confidential and free of charge. Our priority is helping you turn your business around. We will explain a number of options that will satisfy the ATO, and let you get on with the business of building a viable and sustainable entity. Provided your business can showcase its long term viability, there is a good chance the ATO will grant you extra time to make tax payments in the short term.
You may be able to set up a payment plan with the ATO so that you can enter into a workable agreement that satisfies all parties, and relieves the pressure on cashflow. If you need more significant support, we can help you with other recovery options. The ATO has more powers than ever to reclaim monies owed to it – and in some cases, directors can be personally liable for company debts. We have helped countless businesses experiencing difficulty meeting their tax obligations. To learn more call our Director Advice Hotline for immediate and confidential advice from a registered insolvency practitioner: 1300 747 577 or email email@example.com to ask a question or arrange a free consultation. Visit one of our 7 Australia-wide offices to arrange your free consultation.
Personal director liability
If your company is having trouble meeting its tax obligations, there is a high probability that the business is already insolvent. Company directors operating an insolvent business must meet specific criteria or face significant penalties. Don’t risk it – speak to us today.
Key Options for dealing with tax arrears
1. Negotiate with the ATO
The first option is to contact the ATO and request to set up a payment plan. This route is understandably intimidating for many directors. You’ll need to have some information ready when you call, including: > Basic information about your business (i.e. – company name, ABN, registered address, telephone number). > Details about the tax arrears you’re having problems paying. > You’ll also need to have an explanation for why you you’re unable to pay on time and in full, efforts you’ve taken to attempt to obtain the funds needed, how much you’ll be able to pay towards the debt immediately (if any), and how long of an extension you need.
2. Utilise Asset Financing to raise additional funds
You may be able to use some assets – eg equipment, inventory, company vehicles, property, unpaid invoices – as leverage to obtain secured financing. If your clients are other companies with a reliable history of paying you in full and on time you may be able to use invoice discounting or factoring to get an advance on those invoices and use the funds to pay your ATO debt.
3. Propose an Informal Arrangement
An informal arrangement can provide a more flexible restructuring of your creditors and other debts to avoid liquidation. This agreement between your company and it’s creditors (including ATO debt) can allow for lower monthly payments and a centralised payment for all of your unsecured debts. You would need to instruct an insolvency practitioner to draft the informal arrangement and propose it on your behalf. This solution is recommended if you have multiple creditors that you’re trying to restructure.
4. Enter into Voluntary Administration
If it seems as though the ATO may be moving to wind up your company or has issued a Director Penalty Notice to the directors, it may be best to place the company into voluntary administration, which is a formal insolvency procedure in which the directors of your company would appoint an administrator of the business with the goal of facilitating a recovery.
5. Understanding ATO correspondence
We appreciate that in times of financial distress, it can feel like you’re being bombarded by creditors – particularly the ATO – and this documentation can sometimes be difficult to understand. We have extensive experience in dealing with the ATO so if you are unsure, contact your local office so we can explain what it really means and how your company should proceed.
Can you be held personally liable for the ATO debt owed by your company?
If you fail to cease trading and address your tax arrears while the company is insolvent it is possible that you could be held personally liable for some of the company’s debts. Failure to pay your tax or employee superannuation requirements could lead to a Directors Penalty Notice from the ATO. If the company eventually enters into liquidation (which is likely if you fail to pay your tax arrears) then allegations of insolvent trading may arise. We have helped countless directors ease their concerns about tax debts. For a free consultation email us at firstname.lastname@example.org or call 1300 747 577.