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