ATO Risk Management

There are several ways that businesses can avoid difficulties with the Australian Taxation Office or ATO.

Firstly, it should be your goal for all taxation returns and all business activity statements (BAS) to be lodged on time and paid on time.

In addition, correspondence from the ATO should always be promptly and properly answered.

If you do not have the money to pay the tax return or BAS, best practice is to lodge the return or BAS on time and then negotiate a payment arrangement. This risk management strategy is now more critical in light of laws which make people personally liable for BAS which are lodged late.

If things are behind, Rands Advisory Group can quickly bring your affairs into order and open lines of communication with the Australian Taxation Office. This will convert an out of control situation to one which is being properly managed.

Payment Arrangements with the ATO

During the Covid pandemic, the Australian Taxation Office was very lenient in providing payment arrangements and in not chasing overdue amounts.

Times have changed, and the Australian Taxation Office’s collection approach is no longer as lenient. It is harder to obtain payment arrangements, and the requirements are more extensive than they were previously.

An enduring approach of the ATO is to only provide businesses with payment arrangements where the ATO believes the business can afford the payments.

It is also essential that businesses only agree to ATO payment arrangements when they are confident they can make all payments on time and also make all other taxation payments on time. It is an underappreciated requirement of any ATO payment arrangement that all subsequent taxation returns and BAS must be lodged and paid by the due date. If this does not happen, the payment arrangement is automatically in default.

Making You Personally Liable

The Australian Taxation Office has long had the power to make company directors liable for some unpaid tax, through directors’ penalty notices.

A director’s penalty notice gives directors a short period of time to comply with its requirements. A director is required to ensure that the tax is paid; to enter into a personally guaranteed payment arrangement; or to put the company into administration or liquidation. If none of those options occur, the director is personally liable for the tax debt.

New laws, which became effective on 1 July 2012, have extended the circumstances in which company directors have personal liability. Automatic liability can occur when superannuation and BAS forms are lodged late.

Rands Advisory Group can provide you with risk minimising advice and an action plan if taxation, employee superannuation or BAS lodgements are behind. Proactive action can reduce the risk of directors’ personal liability.