The ATO is cracking down on small business tax collection. The accumulation of over $35 billion debt as of 30 June 2014, a 10% increase from the year before, has given the ATO impetus to improve its debt collection. Small businesses are the main offenders owing roughly 60 per cent of total collectable debts.
The ATO is targeting small and medium-sized businesses (SMEs) that avoided paying taxes on time or failed to communicate with the ATO. In addition, the ATO has recently been allocated more funds to crackdown on GST compliance. The 2015 Budget allocated the ATO an additional $265.5 million over three years for the ‘GST voluntary compliance program’. The target areas of the program are GST fraud, evasion and debt.
The recent rise in garnishee notices reflects the ATO’s toughening stance towards tax collection. Under an appropriately issued garnishee notice, the ATO is able to “garnishee” (i.e. redirect) funds from debtors to the ATO itself.
The ATO is prepared to tackle white collar crime. Recently Canberra resident Andrew Richards was jailed for defrauding the ATO for over $300,000. Richards used two false companies to claim GST money and forged business activity statements.
Confronting tax debt is crucial because the ATO is not prepared to support struggling businesses by financing business operations via unpaid tax.
If you have any questions regarding any of the above information; please don’t hesitate to get in touch with the team here at Fortis Accounting Partners. You can reach us on 02 9267 0108, or via info@exemplary-financial.flywheelsites.com.
