This morning, Treasurer Jim Chalmers announced that the ATO had agreed to use its existing administrative discretion to ease the burden on businesses hit by fuel supply disruptions. The specific measures flagged are:
đź“Ť More generous payment plans for outstanding tax debts
đź“Ť Remission of interest and penalties for late payments
đź“Ť Support with PAYG instalment variations where taxable income has dropped (so businesses aren't paying instalments based on pre-crisis income levels)
đź“Ť Limiting compliance actions in the worst-affected industries
đź“Ť Pausing some debt collection actions where appropriate
There will be a threshold for eligibility that has not yet been announced, and the duration of the relief will be closely monitored. “Obviously, where there’s been some concessional treatment… that will be, in most instances, recovered down the track,” he said.
This is promising news for impacted businesses, however, there are two key points to keep in mind:
✨ The devil will be in the detail of how these administrative changes are applied and what the thresholds are as this will dictate how much support businesses receive.
✨ It’s important for businesses that receive relief to realise that its temporary and taxes still need to be paid in time. Far too many businesses got caught out post-COVID after they took advantage of concessions but didn’t have a plan in place to pay those taxes when the ATO came knocking.
It will also be interesting to see if the ATO’s change in approach extends to their assessment of DOCAs and Restructuring Plans. The ATO has slowly tightened their assessment criteria for proposals since COVID. A return to a more reasonable, commercial approach would allow many struggling businesses to resolve their tax issues, rather than just kick the can down the road.