ATO extends a helping hand to small business

November 10, 2023

Navigating today’s business landscape presents distinct challenges for small businesses. When business is doing well, you may feel too busy for paperwork and administrative duties. Conversely, when you’re dealing with larger business issues, prioritising timely submissions of tax returns and business activity statements (BAS) might not be at the top of your to-do list.

If you are in one of these situations and have fallen behind with your lodgements, there is good news. The ATO is offering a reprieve.

ATO’s tax amnesty for small businesses

A tax amnesty for small businesses was announced in the May 2023 federal budget. It means that you can now lodge any income tax returns, fringe benefit tax (FBT) returns and BAS that were originally due between 1st December 2019 and 28th February 2022, and automatically avoid the normal late lodgement penalties. Interest charges will still apply, however, if you have overdue tax payments.

If you’re not sure about which returns fall into the specified December 2019 to February 2022 due date period, you can check the details on the ATO’s ‘Due dates by topic’ page.

You have until 31st December 2023 to complete any overdue lodgements and get back on track with your tax return obligations.

Eligible small business taxpayers

Your business will be eligible for the amnesty if it had an aggregated annual turnover of less than $10 million at the time the lodgement was originally due. ‘Aggregated turnover’ simply means the total turnover of your business plus any other subsidiary or associated businesses you control.

However, if you have personal net wealth of over $5 million, your business won’t be eligible for this amnesty. If your business is not eligible for the amnesty, or if you have late payments outside the amnesty period, you can still apply to the ATO for late lodgement penalty remissions.

Note too that the amnesty does not extend to the lodgement and payment of employee superannuation. You must continue to meet superannuation obligations on time.

Businesses are already taking advantage

An ATO spokesperson advised that 7,200 small businesses had already lodged 19,500 eligible overdue forms by the end of the first two months of the amnesty, which began on 1st June 2023.

The scheme offers business benefits beyond avoidance of late payment penalties:

Cash Flow – Without the burden of additional financial penalties, businesses can potentially have better cash flow management, utilising funds that would have been directed towards penalties in resolving other financial obligations or reinvesting in the business.
Strategic Financial Planning – For eligible businesses, this period provides a chance to reassess and re-strategise financial plans, understanding their tax obligations, and possibly re-aligning their business model to be more sustainable and profitable.
Strengthening of Business Reputations – Regaining compliance and managing financial obligations effectively can help enhance the reputation of a business among stakeholders, including suppliers, customers, and financial institutions, which could be pivotal for future credit applications or business dealings.
Supports Business Sustainability – Demonstrating adherence to regulatory requirements by taking advantage of the amnesty could potentially make a business more attractive to investors or buyers, reflecting responsibility and effective management, and hence contributing to long-term sustainability.

If you need help with tax debt

Once you have completed your overdue lodgements by 31st December 2023 and avoided late payment penalties, you may still find that you cannot meet the resulting tax payments on time. In this case it’s important to contact the ATO to see what support options may be available In some circumstances, you may be able to set up a payment plan online via the ATO payment plan page to help manage your payments. Online payment plans are available for debts up to $100,000.

Professional help is also available

Completing returns and getting them in on time can be overwhelming. You may find that enlisting the help of a registered tax or BAS agent will relieve you of the ongoing administrative burden, help you stay on track with your obligations, and keep you advised of your true financial position.

Beyond the benefits of the amnesty, it’s worth noting that tax time can also be a good opportunity to consider investing in tax-deductible assets that can further benefit your business. If you’re contemplating such purchases and require finance, your broker can guide you through available financing options. The combination of the ATO’s leniency and strategic investment planning can make this tax period an advantageous one for savvy businesses.

This information is for general information purposes only. The information contained herein does not constitute financial or professional advice or a recommendation. It has not been prepared with reference to your financial circumstances or business and should not be relied on as such. You should seek your own independent financial, legal and taxation advice as to whether or not this information is appropriate for you.