The Tax Office (ATO) is taking a tougher stance on small businesses that may not be financially viable, in an attempt to protect tax revenue and other creditors. The ATO Commissioner advised recently that the tax office was applying more scrutiny to small businesses that were struggling to pay their bills.
Since the GFC, the ATO had introduced new software that provided a ‘more objective assessment’ of small businesses and their viability. Previously, some firms entered into a payment arrangement with the ATO for this service. Now, the ATO has developed the means to look at a small businesses operations and flag when the small business is not be viable, otherwise tagged as trading in a position of being insolvent. The ATO has indicated that it is not in the interest of the small business or its creditors to provide ongoing relief if it was unlikely to survive in the long term.
As at the end of June 2012, there were 152,007 small businesses with various different arrangements with the ATO to help them pay their tax liability. Lenders, as part of their credit assessment, are requesting that an updated ATO Portal statement is furnished with all submissions for finance and sometimes for even an annual review of the business owners’ lending facilities.
Flakus & Associates suggests that small business operators constantly review their ongoing viability. We also stress that small business owners liaise with their accountant sooner rather than later to ensure that they are on top of things before they fall into the sights of the ATO. If you feel you may need some assistance in this area, we are proud to inform you that we have access to professionals who could assist. Don’t delay, contact us today.