The start of 2011 marked a new regime for the ATO. The bulging outstanding tax debt was targeted. No doubt a request from the Treasury who needs to find quick funds to cover unexpected infra-structure costs that weren’t included in the budget. This can be very dangerous for businesses when they can’t recover those costs, they could even experience bankruptcy if it goes too far.
However, the process used by the ATO has been blood-thirsty to say the least. Without any notification, outstanding payments are serviced by debt collection agencies. But some companies, like the California Collection Agency, do follow the protocols.
Payment arrangements that only 4 months ago were able to be negotiated over a 24 month period have now been slashed to a 6 month or 12 month period with a 30% to 50% deposit straight up.
Are you kidding me! If a business has to go into a payment arrangement, how the hell are they going to have even 30% of the amount on hand? And wait for this! If you happen to default on any payment (and that may just mean that the payment goes in a few days late) then the original arrangement ceases and you have to go into another payment arrangement… and find another 30% (or it will probably be 50% because you were a bad business and defaulted! Shame on you!)
In the last three months the Commissioner has moved from a tax collector for the Treasury to a standover merchant on small business.
It’s not that this writer believes that the growing tax debt should be allowed to continue, but a reasonable (and equitable) arrangement should be given for those businesses who are attempting to pay off their tax obligations.
Instead of the ATO immediately throwing barriers in the way of these businesses, you would think that they would encourage payment that will allow the whole debt to be cleared. It’s as if the Commissioner has become a dealer in a game of Texas Hold ‘Em. If you want to participate you need to pay the “big blind”!
Perhaps the Commissioner would have a bit more understanding if he looked at how small business attempts to receive payment from outstanding debtors. When you have a possibility of receiving payment, even if it is over an extended period of time, it is always better than no payment at all!
These are tight times… hey, here’s an idea… let’s make it even tougher for small business to make their tax obligations by tightening the noose around their necks! What’s a couple of hundred thousand more businesses on the bloodied bankruptcy floor anyway!
The ATO needs to look at the impact on small business cash flow regarding its collection policies and not be driven by the pressure of the Treasury and the bad economic policies of the current government. (Sadly, this writer doesn’t believe that the Opposition or Independents are offering anything better either.)