The ATO's Inspector General has recently published a report revealing a Total Tax Debt growing by 9.7% between 2013 and 2014. Current outstanding is a staggering $35.5B. Some 24% of the debt is disputed with 19% owed by insolvent entities. That still leaves some $20B collectible.
60% of the totaled is owed by SMEs. Interestingly, the Inspector General criticised the fact that junior officers were able to approve the garnishment of deposits in bank accounts and recommended that such activity should be approved by senior officers. As I have previously observed, Garnishment is a relatively blunt tool; it should only be used against repeat offenders and those trying to cheat the system. Most SMEs with tax arrears are honest businessmen who want to pay their taxes but are unable to due to cashflow problems.
It is important for SMEs to continue to lodge BAS and Activity Statements on time even though they may not be able to pay the related tax debt. It is also important to ensure that cashflow is as strong as it can possibly be. Factoring is a fantastic tool to enhance cashflow and aid the prompt payment of taxes.
FactorONE clients benefit greatly from the increased working capital available to them. They can overcome tax burdens, focus on winning new business and move from stagnation, or even business losses, to positive growth. Our staff are more than willing to offer advice on dealing with tax debt and open to structuring facilities around existing ATO payment obligations.
To discuss how we can help tackle the issues outlined above, give our team a call on 1300 322 867 today.
