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Solutions For Managing BAS and PAYG Payments

At Loan Saver Network we speak to many businesses in regard to their tax obligations. As such, we gain a good understanding of where businesses have issues with their tax obligations. Therefore, there are many different taxes that need to be paid; and it can be easy to make a mistake.

BAS and GST Lodgements

Every financial quarter a business must lodge and pay their BAS.  Also, included in your BAS lodgement is:

  • Initially, GST Lodgement.
  • Secondly, PAYG installment for employees
  • Finally, assessment of PAYG for your company tax obligation. 

We find errors could start with the BAS lodgement as some confusion arises between the PAYG for employees calculation and your company PAYG. Additionally, if you dont pay yourself a wage each week or month; you're accountant would calculate your income tax return at the end of the financial year. As such, this is where a personal tax debt could accrue and should be accounted for.

What are the various taxes payable?

  • Firstly, PAYG for employees
  • Secondly, PAYG for companies
  • Then, GST
  • Superannuation
  • Importantly, your personal income tax. As such, we mention this as it is quite often forgotten.

Tax debt can easily occur when you have made a mistake with the above taxes. Plus, in most cases 2 years has passed before the mistake has been found; and 2 years of tax debt has mounted. 

ATO Debt Collection

The ATO can be quite aggressive in collecting on tax debt. As such, you might view the ATO as a double edged sword - one sharp edge and one blunt one. Thewrefore, if you communicate appropriately they will work with you to resolve the problem. However, if you try to hide, and dont respond then they will seek to close your business.

See related ato hardship and tax debt questions.

A simple way to manage your tax obligations

There are several simple ways to manage your tax obligations. However, as you put on employees and grow your business, the tax obligations become more difficult to manage yourself. Consequently, we recommend employing or contracting a bookkeeper to manage your BAS lodgements. However, if you don't have a bookkeeper and need a simple method in the interim, then try:

  • Put aside a percentage of your profits each month to cover your tax payments. As such, you can calculate the amount required from your previous years' tax paid. Therefore, adding up the total of all taxes paid. Such as GST, Personal income tax, company tax then calculate total tax as a percentage of your income.

If you can’t pay your tax on time, we suggest to our clients to contact the ATO. The ATO is quite helpful if you are proactive in managing tax arrears, and you may be able to set up a payment plan.

Setting up a payment plan with the ATO

When your debt is a small amount under $100k, and all lodgements are up to date; you could set up a payment plan over the phone using the ATO’s automated system. Although, we recommend reading our related article on ato payment plans.

The ATO has guidelines regarding ATO hardship and approving payment plans. As such, a payment plan is a good approach to resolve any tax debt and prevent escalating to legal debt collection.

  • Plus, you can set up a payment plan to give you more time to pay your tax debt off.
  • Also, you may be required to pay some initial deposit.
  • Followed by a series of monthly payments until you have cleared the debt.
  • Payment plans do not usually exceed 24 months and are more common around 12-18 month terms.

Payment plans are a great way to solve the tax debt problem. However, you need to ensure you have the cash flow to meet your monthly payments. The ATO is stringent on monthly tax debt payments. Hence, if you default once, they will cancel the payment plan.

What if the tax debt payment plan is rejected?

Not everyone will be approved for a payment plan for their tax debt.  Otherwise, you are not able to meet their requirements. Other options are to use finance options to repay your tax debt. As such there are a number of options:

All these options below are very different finance products. As such, each is suited to a particular purpose of which you can read about non the relevant pages.

Similar to other consolidation loans, these tax debt finance facilities allow you to pay off your ATO debt either by keeping your existing home loan, or by refinancing your home loan. To do this, you will need to have some amount of equity in your home loan. Also, we have lenders who allow some late payments and arrears with your existing home loan payments.

Business owners often use tax debt finance to pay unexpected tax debts to avoid a forced liquidation or ato bankruptcy. So if you think you will struggle with upcoming tax debts, save the stress, save money, and contact us for advice today on 1300 796 850.

Let's talk about a solution that suits you