The coronavirus has had a massive impact on businesses. Whilst there are various government support schemes in place, many businesses have been losing money and one of the first things that businesses stop paying are tax debts.
At the moment, we are generally seeing businesses with tax debts that fall into one of the following categories:
- Businesses which had accrued tax debts prior to the coronavirus pandemic; or
- Businesses that have incurred tax debts because of the impact coronavirus has had on them
1. Businesses which accrued tax debts prior to coronavirus
If you had an unmanageable tax debt prior to February 2020, then it is likely that coronavirus has had a further impact on your business. In these circumstances, you need to get urgent professional advice and assistance, which we can help with. It may be difficult to turn your business around. However, that does not mean there won’t be other solutions available. These solutions may include:
- A sale of the business, perhaps to a related entity. With any sale needing to be for fair value, among other matters.
- Voluntary administration, which may help compromise your debts, including the debt to the ATO.
- As a last alternative, liquidation.
So, if your business had accrued tax debts prior to February 2020, give us a call for a no obligation discussion.
2. Businesses with tax debts as a result of coronavirus
If you had little or no tax owing in February 2020, but you are now unable to pay your tax going forward, you will not be alone. Numerous businesses will find themselves in these circumstances and we can assist, if necessary. However, the first person to get in contact with is your accountant. There are various measures which the ATO has put in place and your accountant can help you take advantage of them.
The full measures available are set out on the ATO’s website. However, they include:
- Remitting interest and penalties, incurred on or after 23 January 2020;
- Entering into payment plans;
- Deferring payment of tax by up to six months; and
- Allowing businesses to vary PAYG instalment amounts to nil for the March 2020 quarter.
The Federal Government has also introduced various stimulus measures for businesses including the JobKeeper payment. Under this provision the Government will pay businesses $1,500 a fortnight per (certain) employee for a period of six months.
If, after taking advantage of the above measures, you still find yourself with an unmanageable tax debt, then we can help. We may be able to assist with negotiating a long-term payment arrangement with the ATO or with other solutions to save your business.
Make sure you keep making ATO lodgements
No matter which category your business falls into you still need to keep lodging activity statements. If you can’t pay superannuation you should also lodge Superannuation Guarantee Charge Statements (SGC Statements) within a month of superannuation being due for payment. This is because failure to lodge BAS and SGC Statements within necessary timeframes can lead to personal liability under the ATO’s Director Penalty Notice provisions, which also now apply to GST.
Contact us for assistance
If your company has a tax debt, you should urgently seek advice about your and your company’s circumstances. So please contact the Pearce and Heers’ Brisbane or Gold Coast office for an initial, obligation free consultation.