A tax debt which gets out of control and is not subject to an ATO payment arrangement can result in the ATO:
- Adding general interest charge and possibly penalties, which will increase a company’s tax liabilities;
- Issuing Director Penalty Notices to the company’s directors. This can make the directors personally liable for the company’s PAYG Tax, GST and superannuation debts;
- Issuing Garnishee Notices to the company’s bank(s) or debtors. These notices require the bank(s) and debtors to pay funds held on behalf of the company, or payable to the company, to the ATO; and/or
- Commencing action to liquidate the company by issuing a Statutory Demand and then filing a Winding Up Application.
It is important for companies which fall behind in payment of their tax obligations to be proactive in their dealings with the ATO. As if discussions are not commenced with the ATO regarding the manner in which tax debts may be settled, the ATO is more likely to take recovery action.
We assist company directors and their accountants deal with unmanageable tax debts. This includes, discussing risks associated with a company’s circumstances and formulating a manner in which to deal with the company’s problems. To deal with tax debts this includes negotiating ATO payment arrangements including getting the ATO to reduce interest and penalties which it has assessed.
We recommend that company directors are proactive in their dealings with the ATO, However, we also provide assistance to companies with significantly overdue tax debts and lodgement obligations. This includes where the ATO has already taken some form of recovery action.
Examples of Successful ATO Payment Arrangements
We assist in negotiating numerous payment arrangements for companies with the ATO each year, however, some of the matters we have successfully dealt with in the past are as follows:-
- We assisted a large transport company negotiate its 9th ATO payment arrangement in respect of debts totalling several hundred thousand dollars, which included the ATO writing off a portion of the interest and penalties which it had charged the company.
- We provided advice and assistance to a group of civil contracting companies including getting the ATO to withdraw a winding up application. This helped the companies avoid liquidation.
- We assisted a company’s directors negotiate a payment arrangement with the ATO in respect of amounts claimed by the ATO, totalling several hundred thousand dollars. The ATO was claiming the debt against the company and its directors as a result of Director Penalty Notices issued.
- We have on numerous matters assisted a company’s accountant put forward a proposal for a payment arrangement to the ATO iwhere we considered that it was warranted for the accountant to do so, rather than the company engaging us to make the proposal.