The ATO is being called down to hunt down business debt. As such, being truly Financially Sorted is so much more than just submitting your annual income tax return. It’s making sure that business debt is in control.
The double whammy of a pandemic hangover and adverse economic conditions meant the ATO’s debt collection action was bound to trigger a spike in insolvencies and many problems.
Experts have long been predicting a rise in business failures and higher level of debt. The ATO’s decision to call time on debt meant many would need to be wound up.
We’ll always knew it was coming.
The ATO’s collectible debt has tripled over the past couple of years to somewhere approaching $60 billion – so it was only a matter of time before they said to everyone, it’s time to pay, and time to be Financially Sorted.
Director penalty notices are now being issued at the rate of 30-40 a day, the ATO admitted. It had begun reporting debt of $100,000 or more to credit agencies.
This followed a series of more than 80,000 warning letters sent out in April that alerted company directors that they needed to address their liabilities or the ATO would act.
The warning shots were clearly just the start, and tough decisions would now need to be made!
“We’ll definitely see an up-trend – that a lot of taxpayers are in a situation where they do need to address this issue. Many have some accumulated liability and we’re coming out of a period of forbearance and it’s now time to pay.
That’s what the experts have been predicting – it’s difficult to see how it works any other way.
Running a business is tricky at the best of times. At the moment there’s so many challenges out there. It seems quite likely that it’s going to be a wall too high for a lot of businesses to climb over.
Pandemic measures were essential and staved off panic; but shutting down the economy for extended periods was eventually going to have an impact. This makes business debt hunted by the ATO only something that business owners would be aware of.
A business that was previously operating in a viable manner, pre-pandemic, what does that look like now? How we acted for the past few years will now be in close watch from the ATO, so we have to ask these questions.
Is it still viable?
Is it still relevant?
Do the numbers still stack up?
Rising inflation, interest rates and wages are challenges for businesses that are not necessarily doing much more than just surviving at the moment. How do they deal with that?
It’s a tinderbox at the moment, and I’m not sure we can predict or what comes next?
There’s going to be some fall-out and there’s going to need to be some changes!
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