Managing ATO tax arrears can be challenging, especially with recent changes in recovery practices.

As ATO tax arrears have risen significantly, the ATO has adopted more stringent recovery measures, making it crucial for businesses to explore all available options for managing these debts.

Current State of Play:

The ATO’s approach to managing arrears has become more aggressive, particularly for businesses with outstanding debts over $100,000. The ATO now:

• Registering defaults on company credit files for any “unaddressed” arrears over $100,000.
• Being less receptive to payment plans & if plans are requested, the ATO are now looking for more detailed submissions where the debt exceeds $200,000.

For businesses with arrears:

• Under $200,000: 10% deposit, typical term – 18 months.
• Over $200,000: 10% deposit, plus evidence of the need for a payment plan and supporting financial information. This shorter term can be particularly challenging from a cashflow perspective.

As an example, on $200,000 the payment profile would likely be:

• 1 month at $20,000
• 17 months at $11,400

Alternative Solutions

If a standard ATO payment plan isn’t viable, there are other financing options to consider:

• Unsecured Working Capital Loan: $200,000 over 3 years at $7,300 p/m.
• Secured Working Capital Loan: $200,000 over 3 years at $6,575 p/m or 4 years at $5,200 p/m, using unencumbered assets.

For businesses facing ATO arrears, it’s essential to explore all available financing options to manage debt effectively. Speak with your Finlease broker to discuss these alternative solutions and find the best fit for your financial situation. By taking proactive steps, you can potentially alleviate financial pressure and position your business for growth.

For more detailed information, watch this webinar from Worrells, providing a comprehensive overview of managing ATO arrears and alternative financing options.

Need more information? Get in touch.