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Do you have Tax Debt owing to the ATO? Are you wondering how you can pay it off? Is the ATO sending payment requests or debt collectors?
Wondering how you can meet your past and future tax obligations? Do you just need some restructuring to help you keep trading?
Are you looking for a company with the Tax Debt know how and ATO experience to provide you with a real solution? Then Call Us Today
Below are a list of common questions about ATO debts and the tax debt solutions we are able to provide.
Q: How do I apply for ATO Tax Debt Hardship?
A: There are a number of ways to apply for Tax Debt Hardship:
- Call the ATO to discuss hardship and if you fit within their requirements. You will need to fit within the ATO’s guidelines for hardship which means financial difficulty associated with:
- Business Closure
- Disconnection of essential service
- Repossession of vehicle for business purpose.
- Imminent legal action pending for non payment of debts
- Period of review limitations
- Court Orders
- Other necessities for the business or people you are responsible for.
You will need to provide evidence of your financial hardship.
The policies to be granted financial hardship can be complex, and you may not be approved. The outcome of a successful tax debt hardship ruling may not provide sufficient time for you to repay your debt. If this is the case, other options may be best suited to you which can be assessed to identify a better solution.
Q: What is involved with ATO Tax Debt Negotiation?
A: Tax Debt Negotiation is available, however there are a few conditions the ATO requires to be met before a negotiation can commence or be granted. The ATO requires all of your tax financials to be lodged along with all of your BAS lodgements. The ATO wants to understand the full tax debt obligation, along with their internal assessment of interest and penalties applied to the account.
At times this is not practicable as there may be a pending business wind up, bankruptcy, or court case pending for the debt. However, it is best to disclose any pending court matters, or wind up with us so we can determine if a tax debt negotiation solution is available within your overall strategy.
The above is not related to ATO payment plan negotiations, but more serious tax debt hardship issues.
Q: Can I obtain a bank loan to pay tax debt?
A: Traditional lenders will not lend for tax debt purposes. They have loan approval, and also settlement procedures to identify if a person or business has a tax debt. If a tax debt is identified the loan will be declined, even if identified the day prior to settlement. This means applying for a tax debt loan via traditional lending avenues can cause major issues. The delays can then result in the ATO furthering a business wind up, court action, or bankruptcy to recover their debt.
Q: What’s involved in borrowing to pay tax debt?
A: Borrowing to pay a tax debt is very much the same as traditional lending, however there are specific intricacies related to paying tax debt. These issues also affect the types of loans available. The loan structure needs to meet the business cash flow requirements too. Often substantial work is completed to ensure a business has the correct loan structure to allow sufficient on cash flow for business to continue.
There are some other back end processes to minimise future risk to your assets and something that sets out team apart.
Q: Are there business tax debt loans?
A: Yes, there are a number of short term lenders who offer business tax debt loans. They also have different loans such designed to help businesses cover debts while continuing to trade. These loans often require a proven exit strategy.
Q: How to pay off tax debt?
Q: I can't pay my tax debt, what do I do?
A: If you cant pay your tax debt there are a number of options which you can choose. They could involve one of the following:
- tax debt hardship application
- obtaining finance to pay your tax debt
- negotiating your debt with the ATO
- and remissions of the tax debt, penalties and interest.
If you are unable to pay your tax debt, we advise making contact with us immediately. The more time available will help us formally assess your potential to avoid further legal or bankruptcy issues.
Q: Are there loans to pay off tax debt?
A: Yes, we would assess and provide a proposal advising what your most suitable course of action would be. There are a number of solutions for tax debt loans. Choosing the right one can be the difference between staying n business or not.
Q: How can you be released from your ATO tax debt?
A: We have seen cases where clients are released from tax debt, though it is very rare. The most common result is a remission of the penalties and interest associated to your tax account. In most cases the ATO will require all financials and BAS accounts to be lodged and up to date before they will review.
Q: I have a Tax Debt to the ATO, can I set up a payment plan?
A: Yes, if your debt is under $25000 it can be set up via automated phone prompts. If your case is under a collection process, or involves debt collectors, then you will be put through to a collection officer. Usually the payment plans do not exceed 24 months. Most common results are to have the debt paid in 18 months.
Usually the requirements for a tax debt payment plan are that all obligations are to be maintained such as BAS lodgements, financials, and superannuation obligations. If they are not met then the payment plan would be cancelled and any legal action proceeded with.
Q: Why do I have a tax debt?
A: There are a number of reasons a tax debt can occur which we have found tend to fall into the categories below:
- Misunderstanding of your tax obligations. We find this is mostly the case with small businesses where the business owner didn’t understand all the taxes needed to be paid. This could include personal income tax, business income tax, GST, PAYG instalments and superannuation owed.
- Use of tax funds for other purposes such as marketing – ie the ATO is used as an overdraft.
- Family issues such as a death in the family, or illness.
- Marital issues.
- Accountant issues.
- Bookkeeping issues.
- Business Cashflow issues.
Q: Will ATO bankrupt me?
A: As an individual, yes. As a business they can wind up your business under an involuntary business wind up.
Q: I received an ATO wind up? If my business closes the ATO will get no money. Why?
A: The ATO has a number of mandates under their taxation provisions. If you don’t pay tax, they see your business as creating a non-competitive environment of trade. The belief is that if they remove your business, another business will step into your market share and begin paying taxes. If your business is wound up after being declared as insolvent, they will usually also try to seek a director’s bankruptcy. This is so they can attempt to secure the sale of directors assets. There are provisions, and limitations to this. To understand your options, we highly recommend discussing your situation with us at your earliest opportunity.
Tax Debt Video – The Benefits Of Consolidating Loans To Solve ATO Debts
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