The ATO recommences debt collection

Qubik CEO, Dominic Guinea says he expects it to be a slow start.

As the ATO looks to re-engage with the business community it’s inevitable that their debt collection activities, which were halted in early May amid the COVID-19 chaos, will resume in the near future.

However, Qubik CEO, Dominic Guinea, says he expects it to be a slow start.

“Implementing any change is painful, the ATO won’t want to exacerbate the challenges that businesses are experiencing at the moment. However, they basically broadcasted blanket deferrals for almost everybody so they need to start the conversation with businesses who can afford to start making payments, to get some revenue flowing back into the system.”

“We’re assuming they’ll start with statements to confirm what debt is owing and then we’ll probably see these statements followed up with a phone call asking for affordability, but we haven’t had any guidance as yet.”

Mr Guinea expects it will be some time before we see the rollout of hard debt collection in the form of Garnishee notices or other enforcement action.

“In addition to garnishee notices we would normally expect the ATO to pursue court action however in the current climate I don’t see that happening.”

Mr Guinea says many people have preconceived ideas about the ATO and for one reason or another find the nation’s tax collection body to be intimidating.

He says this is the perfect opportunity for Australian businesses to learn more about the ATO, the way in which they conduct their activity and the support they provide to Australian tax-payers.

“In our experience over the last decade, almost without exception, we’ve always found the ATO extremely accommodating to businesses who are suffering cash flow pressure.

“It’s when businesses make no effort to engage with the ATO and ignore correspondence that we’ve seen the ATO pursue enforcement action, including court action.

“We actually have an example where the ATO had taken a client to court to have the business wound up and on that same day the ATO agreed to terms so that the client could pay off their debt.

When speaking to Accountants Daily earlier this week, ATO Assistant Commissioner, Sylvia Gallagher, suggested Australia’s now biggest lender wants to ensure that Australians are getting back on track sooner rather than later, so they don’t find themselves in a worse position in the future.

This of course excludes Victoria where plans for a staged reopening of businesses were announced last week.

The Commissioner of Taxation made these comments in early August when the state’s lockdowns were extended.

“You can rest assured that we will not apply penalties for late lodgement of Business Activity Statements that fall due during August and September. This measure will be in place until the end of September, when we will review and extend it if necessary. This is in addition to our concessional approach to significant global entity penalties announced last month.”

The Accounting Profession called for a slow and steady approach to debt collection activities which was echoed by Small Business and Family Enterprise Ombudsman Kate Carnell when she spoke with Accountants Daily.

“It’s important the ATO take an approach that understands people are doing it tough right now and they will need, in many cases, to give a reasonable approach to those sorts of issues.”

Dominic Guinea says the first move for all small to medium sized businesses worried about their tax debt is to contact their accountant to confirm whether their lodgements are up to date.

“Your accountant can then discuss with you what lodgements are outstanding, what tax debts are owing and develop a plan to manage your cash flow before making arrangements with the ATO to implement a payment plan.

“Given the current circumstances we are expecting the ATO to be very accommodating for businesses. Try not to stress, focus on what you can control.”

The road to economic recovery will be long but the sooner a plan is in place, the sooner you can do what’s necessary to ensure you and your business come out of COVID-19 with a healthy outlook.

If you have questions or concerns get in touch with our office on 07 3205 8938 or via our contact us form.

The Qubik Team

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