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The ATO has been very patient during the COVID-19 pandemic – but that is about to change!

During the COVID-19 pandemic, the ATO has been patient with individuals and small businesses – allowing them plenty of opportunities to get their tax affairs in order.

But with the end of JobKeeper, the ATO has recently announced a resumption of its compliance activities.  The ATO will resume debt recovery action – particularly against taxpayers who fail to lodge, fail to respond to payment requests or break promises.

“From the end of March 2021, where appropriate, the imposition of penalties will resume – and on a case-by-case basis, we will start taking debt and lodgement compliance actions”, an ATO spokesperson has announced.

That is no surprise, given the tax debts owed to the ATO by individuals and companies have now reached $53 billion.

In support of this anticipated increase in debt recovery activity, the ATO has recently stepped up its advertising for job vacancies within its department.  The closing date of some of the vacancies are listed as “never closes”.

The Federal Government is doing what it can to incentivise small businesses to, at the very least, get their ATO lodgements up-to-date.

The recently-introduced ‘Small Business Restructuring’ and ‘Simplified Liquidation’ insolvency processes are only available if, amongst other things, all ATO lodgements are current.

But, the pre-existing insolvency processes of voluntary administration and liquidation are still available to companies which have outstanding ATO lodgements.

The ATO has, however, offered an olive branch to taxpayers who are genuine and in need of help.

“We understand the bushfires from last year, COVID-19 or the floods more recently may continue to have a significant impact on taxpayers and tax professionals.  The ATO will always provide help and assistance to anyone who engages with us.  We will generally not take compliance action where we are aware you are trying to do the right thing”, the ATO spokesperson also announced.

Companies and individuals who are unable to meet their tax payment obligations ought to contact their advisor or the ATO and seek help.

Or, if debts become unmanageable, we can review their available options.

Dominic Cantone
Dominic Cantone Partner
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