ATO

Small business conditions, ATO debt collections, ASBFEO Tax Concierge Service, global computer outage

Emily Carter — Wed, 24 Jul 2024 02:02:15 +0000

Small business conditions, ATO debt collections, ASBFEO Tax Concierge Service, global computer outage Emily Carter Wed, 07/24/2024 - 12:02

23 July 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Jess McGuire.

ABC Radio NSW Regional

Subjects: Small business conditions, ATO debt collections, ASBFEO Tax Concierge Service, global computer outage.

Jess McGuire

Now, you might have heard the grace period that was offered during the Covid lockdowns has ended and the Australian Taxation Office is going hard to recoup more than $50 billion in debt that's owed, most of it by small business. Now, could that be an extra burden to mum and dad businesses already struggling through a cost-of-living crisis?

Bruce Billson is the Australian �Թ�� and Family Enterprise Ombudsman. Thanks for joining us, Bruce.

Bruce Billson

Jess, fab to be with you and your listeners.

Jess McGuire

Now, how do you see the cost-of-living crisis impacting small business right now?

Bruce Billson

Oh, it's very profound. Your earlier text message summed up one aspect of it, and that is what's the cost-of-living crisis for households is a cost of doing business crisis for small and family businesses, without often the market power to push back on those price increases. They're not in a position to negotiate a special deal with the energy provider. They're not in a position to negotiate sweetheart arrangements with landlords. Insurance costs are very much on the up and up, if you can get it. Some businesses struggle to get that. And of course, we've seen pressure in wages and staffing costs as well. Superannuation is up. This is a really challenging time, which is why we revealed, in recent months, 46 per cent of small businesses for the full year, where tax data is available, weren't making a profit.

So, this is a very challenging time. There's no sloppy profits and juicy margins around, and I certainly feel for and get out of bed every day working for those small and family businesses that are finding it very challenging right now.

Jess McGuire

During the pandemic the Federal Government provided support to small businesses and the ATO paused some debt collection with the hope that there would be some economic recovery. But there’s a current cost-of-living crisis, so do you think we should be considering additional support for small businesses rather than calling them back for those debts?

Bruce Billson

Well, I think the first thing we should do is recognise just how tough it is. Even during Covid there was some discussion about just how profitable things were for business and small businesses were thinking ‘are you talking about us?’ There's not those strong profits. I remember the phrase ‘strong balance sheets’. A lot of small businesses now have no cash reserves. They've depleted those during these challenging times and their emotional reserves are also challenged.

So, when it comes to things like the collection of outstanding tax, what I've been urging the Tax Office to do – and working actively with them - is to take a really measured and engaging approach. So that it's not, you know, bringing the full armoury, and let's face it, that Tax Office, has immense armoury if they want to use it. But actually, to think thoughtfully about how to engage with small and family business owners, probably feeling a big pressure of running that business, that there's livelihoods dependent on them, and that they need time and support to work through those challenges.

You can't not collect the tax debt forever, because that's not fair to the businesses that are paying their debts. And in many cases where there's an outstanding tax debt there's also an outstanding superannuation guarantee contribution. So, you know, there's team members of their workforce that should have that money going into their superannuation retirement account. And that's not been happening. And that's something that needs to be addressed as well. But engaging measured, supportive approach is what we've been calling for.

Jess McGuire

So, there is a crackdown happening with direct penalty notices. So, people who are company directors of small businesses that were hit with bills, they've accrued large amounts of interest on those debts. I know of one former company owner facing a bill of $437,000 from 11 years ago, and the reports that I was reading was saying there's a massive increase in calls to debt counselling services. It's a terrifying prospect that you open the mail and you find a bill of that size, and you're told you've got 21 days or 28 days to sort it out. How do people cope with that?

Bruce Billson

Well, thankfully, that's usually the end of a much longer process. And really, it's one of the concerns that we keep raising. Many businesses are reluctant and quite hesitant to reach out for help. And one of the things the Tax Office, to their credit, will do is if you contact them first, rather than have them contact you, the opportunity to work through payment plans. The chance to take account of any hardship that you might be experiencing yourself and actually working through an approach that sees those tax responsibilities met in a timely way.

Some businesses have chosen, because of that accommodation you referred to during Covid, to maybe pay other bills and not pay their tax bill. So, it's been a bit of a cashflow management thing where they've had the capacity to pay, but perhaps may have chosen not to, or maybe prioritise the suppliers that are vital to their business, over paying their tax bill.

One of the other tools that the Tax Office is using now is to report outstanding tax amounts to those credit reference bureaus where you can check in on whether money's outstanding. That's new because in the past they haven't done that. Whereas if you hadn't paid a supplier for, say, vital equipment or whatever, your name might appear in one of those credit reference bureaus as something to be cautious about. That's another change that's playing through.

But what we're urging the Tax Office to do is no surprises. No fright in the middle of the night. But we're also saying to small and family businesses who are experiencing challenges, reach out to the Tax Office, let them know you're aware of those responsibilities, and work up a plan to see that they can be met within a reasonable timeframe.

Jess McGuire

And Bruce, I'm imagining, and I don't know, but I'm imagining that sometimes those letters that go out or the contact that goes out, sometimes these things are automated and when you call up and you contact and you speak to a human being, you may have better luck. And at least you know you can stop the ball rolling.

Bruce Billson

And often those notices are, let's say, warnings that something's NQR. Something's not quite right, contact us and let us know what it is, and we'll work out a process.

If all else fails, small businesses can reach out to my agency. We offer what's called a Tax Concierge Service, where if there's some dispute over the amount that's been claimed to be outstanding or the assessment is something you want to contest, we can help a small or family business that won't have the benefit of a tax legal degree to actually get some advice to see whether they have a legitimate case or not.

And then we can help onboard that into the Administrative Appeals Tribunal, where there's a belief that there's been an error of assessment. Something that's worth noting though, Jess, is about 80 per cent of that outstanding debt is self-assessed. The business themselves has said, look, we believe this is what we owe, because our system is very dependent on self-assessment.

And so there's not really a contest over the amount. It's whether and when the amount would be paid. And particularly if there's an outstanding superannuation guarantee liability there, satisfying that quickly is what the Tax Office looks for. And then there’s further conversations about how a payment plan or something might address the other outstanding matters.

Jess McGuire

But reach out to someone, communicate with somebody, because you do not need to be alone through this. I can only imagine how stressful it is. I wonder how many small businesses have folded. Do we know?

Bruce Billson

Yeah, look, that varies because there's a couple of things that we're seeing right now. During that Covid period, not just the Tax Office, but the banks put their spears away. So, there was very few involuntary winding-up insolvency events. And so we've seen what would normally happen in that process where businesses are formed. Some succeed. Not all do though. That's the nature of running a business. You see some of them fold during that time and in some cases where there's money outstanding, you'd see creditors taking action to wind up a business to see what cents in the dollar they can get for that outstanding debt. That was paused during Covid. So that's coming back, so you're seeing numbers that are getting back to where they were, or a little bit over, pre-Covid.

But then there's also businesses that we're seeing through our intelligence that used to employ people that are reducing the number of staff that they employ, or becoming a sole trader, just to manage those things. And we've seen other examples where people are changing their business model. You and I might be a hairdresser... we might employ four or five staff. We're just not sure about, you know, the costs of running that business. We might make our chairs available for individual hairdressers to come and operate within our premises. That's a different model as well. So, we are seeing quite a lot of change, but it is a difficult time. And the best we can do is get alongside and support small and family businesses because they matter a lot.

Jess McGuire

And look, before I let you go, I've got to ask, the national computer outage on Friday. I mean, how does that sort of thing impact small business?

Bruce Billson

Well, it can take out your show. This is one of the challenging things. Just like we encourage people to be engaged with the Tax Office, we also look at ways of streamlining the business of running the business. Very few people wake up in the morning, go, wow, I'm in business, I get to fill out a BAS every quarter. That's not the world we live in. They've got some of the driving passion and the business of running the business is a bit of a pain point.

Often digitisation, having digital systems can help with that. But then you get something like this and it takes out that system. So, all of a sudden you can't actually engage in trade or commerce because those tools that sit behind what you do to delight customers aren't helping you run the business.

There’s a bit of pain in that space at the moment. Same can happen when the telco services go out and your EFTPOS machines aren't happening. These are the many challenges that make running and owning a business a big responsibility. There’s certain stuff that you've got influence over. There’s other stuff you've got to somehow find a serenity to get through that, bounce out of bed the next day and delight some more customers if you can.

Jess McGuire

Bruce Billson, Australian �Թ�� and Family Enterprise Ombudsman, thanks so much for your time. Really appreciate the conversation.

Bruce Billson

Great to be with you, Jess, and best wishes to all the enterprising men and women listening to you show.

Jess McGuire

Good on you. I'm sure they appreciate that. Thanks so much, Bruce.

Ombudsman praises ATO small business independent review service

admin — Fri, 10 Dec 2021 04:06:29 +0000

Ombudsman praises ATO small business independent review service admin Fri, 12/10/2021 - 15:06

26 March 2021

The Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson has welcomed the ATO’s decision to turn its small business independent review service into a permanent offering, following a highly successful pilot program.

Mr Billson says the ATO’s now permanent independent review service provides small businesses with a timely, free and fair dispute resolution pathway.

“I congratulate the ATO for taking a proactive approach with this commitment to help resolve small business tax disputes,” Mr Billson says.

“The ATO has acted quickly to implement a key recommendation in our recently released report: A tax system that works for small business which will help support small businesses when they disagree with an ATO audit position.

“This ATO decision is a substantial step in the right direction in ensuring small businesses are given a fair go.

“More than 180 small businesses who participated in the pilot program reported the process was fair and independent, irrespective of the outcome, so we welcome the ATO’s move to lock in this service permanently.

“The ATO’s small business independent review service is a crucial part of ASBFEO’s vision of a tax system that works for the small business sector, so businesses can achieve greater productivity, return to profitability and grow employment.

“This ATO service marks an important contribution to a supportive environment which is needed now more than ever as small businesses recover from an incredibly tough 12 months.”

Small businesses engaged in a tax dispute are encouraged to contact ASBFEO for assistance on 1300 650 460 or email info@asbfeo.gov.au.

New rules to ensure small businesses in dispute with ATO get a fairer go

admin — Fri, 10 Dec 2021 03:49:02 +0000

New rules to ensure small businesses in dispute with ATO get a fairer go admin Fri, 12/10/2021 - 14:49

10 May 2021

The Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson says small businesses in dispute with the ATO will get a fairer go, under new rules proposed by the Australian Government.

Mr Billson welcomed the pre-Budget announcement, giving the Administrative Appeals Tribunal (AAT) greater powers to pause or change debt recovery actions applying to a small business in dispute with the ATO.

“Small businesses disputing an ATO debt in the AAT will get a fairer go by stopping the ATO from relentlessly pushing on with debt recovery actions against a small business, while the case is being heard,” Mr Billson says.

“I commend the government which has acted quickly to implement a key recommendation in our recently released report: A tax system that works for small business which will allow small businesses to pause ATO debt recovery actions until their case is resolved by the AAT.

“Currently, small businesses are only able to pause or modify ATO debt recovery actions through the court system. This can be prohibitively expensive and time consuming for a small business.

“Under the proposed changes, small businesses can save thousands of dollars in legal fees, not to mention up to two months waiting for a ruling.

“In line with the recommendations in our report, the AAT will be able to pause or modify any ATO debt recovery actions, such as garnishee notices, interest charges and other penalties until the dispute is resolved by the AAT.

“It means that rather than spending time and money fighting in court, small business owners can get on with what they do best – running and growing their business.

“These proposed changes follow the ATO’s decision to turn its small business independent review service into a permanent offering.

“ASBFEO’s tax concierge service and ongoing advocacy work has led to substantial tax administration improvements for SMEs, with leadership from ATO Deputy Commissioner �Թ�� Deborah Jenkins and government support.

“Collectively, these changes align with ASBFEO’s vision of a tax system that works for the small business sector, so businesses can achieve greater productivity, return to profitability and grow employment.”

The new powers for the AAT will be available following Royal Assent of the legislation.

Small businesses engaged in a tax dispute are encouraged to contact ASBFEO for assistance on 1300 650 460 or email info@asbfeo.gov.au .

�Թ�� and Family Enterprise Ombudsman backs tax report

admin — Fri, 10 Dec 2021 02:38:15 +0000

�Թ�� and Family Enterprise Ombudsman backs tax report admin Fri, 12/10/2021 - 13:38

14 October 2021

The Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson, has strongly backed a call from the Inspector-General of Taxation for the Australian Taxation Office to more consistently and transparently inform taxpayers of their right to review, complain, and appeal decisions.

“This is a significant investigation and report by the Inspector-General of Taxation and Taxation Ombudsman, Ms Karen Payne, and the findings and recommendations are really important for delivering a better and fairer tax system,” Mr Billson said.

“Tax issues are among the top concerns for small businesses, and it is critical for the Tax Office to step up as a modern revenue agency to help people as part of their Charter.”

Ms Payne’s report called for the Tax Office to update the Taxpayers’ Charter to include an express right to be informed of rights to review, complain and appeal decisions and to be told about all relevant channels to do so.

The report found over the past three years fewer than 1 per cent of Tax Office staff had attended a training course to teach them how to tell taxpayers about their rights to complain, review or appeal a decision and a survey found 60 per cent of taxpayers were unaware of or had not used the Tax Office’s complaints function.

“I am pleased the Tax Office has embraced this report from the Inspector-General and has committed to working through these important recommendations,” Mr Billson said.

“I look forward to seeing the Tax Office implement these changes to improve the way it deals with taxpayers.”

The ASBFEO has released several reports outlining measures to improve the tax system for small business, especially around the vital need to tell taxpayers about their opportunities to complain about or have a decision reviewed.

Since March 2019, more than 650 small businesses have sought the help of the ASBFEO’s �Թ�� Tax Concierge Service - a team of specialists and case managers who respond to requests for assistance from small business who receive a negative decision from the Tax Office.

For further information about the Concierge Service call 1300 650 460 or email info@asbfeo.gov.au

Media contact: 0448 467 178

Ombudsman urges small businesses to get on the front foot at tax time

Toby — Thu, 02 Dec 2021 02:19:32 +0000

Ombudsman urges small businesses to get on the front foot at tax time Toby Thu, 12/02/2021 - 13:19

30 June 2021

The Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson has urged struggling small and family businesses to be proactive at tax time, as a new report reveals declining payment plans despite record collectible debt owed to the Australian Taxation Office (ATO).

Mr Billson says the report, released today by the Inspector General of Taxation and Taxation Ombudsman (IGTO), shows that although SMEs owe $21 billion to the ATO – well over half of this collectible debt is held by just 6.4% of SMEs.

“The vast majority of small business owners are doing the right thing and complying with their tax obligations,” Mr Billson says.

“This report shows that while collectible debt owed by small businesses to the ATO has reached an all-time-high, in reality the breakdown sees the majority of debt owed by very few SMEs while the remainder is very small amounts of debt spread over a small percentage of Australia’s more than 2 million SMEs.

“In fact, less that one per cent of small businesses owe $2.5 billion to the ATO, according to the IGTO’s report.”

Mr Billson says the reported decline in small business payment plan arrangements over the past three years is a concern.

“For those small businesses that are struggling to meet their tax obligations, now is not the time to put your head in the sand,” Mr Billson says.

“Small businesses are strongly encouraged to get on the front foot by lodging now and reaching out to the ATO – either online or by phone - for a tailored payment plan, if having difficulties meeting payment obligations.

“The ATO has told my office it is also introducing a system for payment plans in arrears to give small and family businesses a chance to get back on track rather than falling into default and having to start again.

“While the ATO is signalling plans to return to collection action, which it relaxed during the pandemic, it has also indicated to my office that its predominant strategy is to support and assist small businesses wherever possible.

“The ATO has acted on key recommendations in ASBFEO’s report: A tax system that works for small business to turn its small business independent review service into a permanent offering.

“This is in addition to the Australian Government giving the Administrative Appeals Tribunal (AAT) greater powers to pause or change debt recovery action applied to small businesses in dispute with the ATO.”

Small businesses engaged in a tax dispute are encouraged to contact ASBFEO for assistance on 1300 650 460 or email info@asbfeo.gov.au

ATO

Small business conditions, ATO debt collections, ASBFEO Tax Concierge Service, global computer outage

Ombudsman praises ATO small business independent review service

New rules to ensure small businesses in dispute with ATO get a fairer go

�Թ��� and Family Enterprise Ombudsman backs tax report

Ombudsman urges small businesses to get on the front foot at tax time

�Թ�� and Family Enterprise Ombudsman backs tax report