New ATO Debt Recovery Focus

The ATO have announced new measures in relation to their debt recovery process, and from what we have seen already a lot of small businesses are going to suffer from the new hard-line approach.

All debts of $7,500 or less will be referred to external debt collectors within 4 to 6 weeks of the due date. If payment arrangements are defaulted by way of non / late lodgment or payment, futher payment plans will not be granted.

For debts over $25,000, they have shifted their focus to business viability. They have software to analyse businesses and if they don't believe it's viable they will wind it up.

For debts over $100,000 they will look to audit the taxpayer, and send a debt collection officer with the auditor to determine what assets (personal & business) are held that they can sell off. They will also be asking for Aged Debtors listing with the view of garnishee notices to Debtors - which of course could have disastrous consequences for the future of the business.

Their message for tax payers who are contacted regarding outstanding debt is they shouldn't ignore it as the process will escalate quite quickly. In the final stages of the process the taxpayer may not always be aware of what action has been taken if the ATO are concerned that there is a risk the taxpayer will sell off their assets.

They are also in the process of expanding the Director Penalty regime from just PAYG withholding to GST, Excise, Super and Income Tax as well. This has not as yet received the royal assent but the ATO are confident that it will be approved and this will take effect from 1 July 2010.

Please call Damien or your Client Manager if you need to discuss how any of the above measures could apply to your situation, it's important these matters are addressed urgently.

Key dates between now and the end of July include:
21 July: June 2010 Monthly Activity Statements due for lodgement and payment
28 July: Superannuation guarantee contributions, in relation to wages and salaries paid during the quarter ended 30 June 2010, to be received by the fund by this date.