The ATO has released guidance for small business and sole traders to help understand their options when they can’t pay their tax debts on time.
It includes information about the stronger actions that the ATO may take, and also emphasises that businesses must continue to lodge and report correctly
What happens if you don’t pay
If you don’t pay the amounts you owe on time, the ATO will:
The ATO may take stronger action if you are unwilling to address your debt or repeatedly default on agreed payment plans.
The ATO don’t currently refer selected debts to external collection agencies for collection on their behalf, but may do so for some cases in the future.
Make sure you lodge your activity statements and tax returns on time even if you can’t pay by the due date. You’ll avoid a penalty for failing to lodge on time and the ATO will know you’re aware of those obligations.
General interest charge
If you don’t pay on time, the ATO will automatically add a general interest charge (GIC) to what you owe. Your debt will grow each day your debt remains unpaid.
Interest calculates on a daily compounding basis on the amount outstanding and is added to your account periodically. The ATO revise GIC interest rates quarterly.
You can generally claim a tax deduction for interest charged in the year it’s incurred.
You can ask the ATO to remit you interest, such as reduce or cancel, some or all of your interest by:
- Phoning the ATO on 13 11 42 during operating hours – for interest charges up to $25,000
- Writing to the ATO at GPO Box 9990 in the capital city of your state or territory
- Contact your usual Suttie Financial Group Accountant or enquiries@respl.com.au
