In today’s tough economy, Australian SMEs are under pressure, especially with the ATO increasing its collections efforts. With rising debt levels, it’s crucial for businesses to address their ATO debts quickly. Olga Koskie from Tax Assure urges SMEs to tackle debt issues before they worsen.
Koskie, a former commercial litigation lawyer with 20 years of experience, is now Director at Tax Assure, specialising in tax debt negotiations. She shares insights on how the ATO collections campaign affects SMEs and offers practical steps to take.
“There was a misconception within the community that if you just pay the debt back in full and then call the ATO, saying ‘I went through hard times, can I please have my interest back,’ that it was an automatic right. It is not, and the ATO specifically issued press releases around that. The ATO have very specific Legal Practice Statements that have to be addressed in order for the Commissioner to consider a remission of the interest.”
“The ATO also doesn’t treat the core debt and the interest as separate components when you are looking at a debt. The ATO looks at it as a whole debt, and I think that’s demonstrative of their attitude around ‘well, if taxpayer A is paying their tax on time then, from the ATO’s point of view, then there should be a ramification for taxpayer B’. This is the Commissioner’s public position at the moment. It is still possible with the correct applications to get the interest remitted, as we are still having success, but it is not a given right and it is certainly not automatic.”
“At the moment, the ATO charge interest at 11.34% compounded daily. So, when you look at other financial services, they may be a much better solution, the ATO cannot be considered a cheap small business bank.”
“The reality is, it’s a far more complex environment than it was 10, 20 years ago, 5 even.”
“I think it’s a really hard space and it’s really tough to say that your accountant should be able to do everything, or tough to say that your wife as the bookkeeper should be able to do everything, or even you as the sole trader who has been running the business.”
“You’re not going to get a carpenter to come and lay the tile in your laundry. They can probably do it. Probably do an okay job, but your tiler is going to do a much better job, probably going to be a bit cheaper, because he does it all day every day. So that’s my philosophy.”
“I strongly advocate seeking specialist assistance, especially in today’s complex landscape where it’s impossible to know everything. Specialists in specific financial areas can provide insights and solutions you may not even be aware of.”
“We’re not liquidators and we’re not accountants; we are very specialised as niche tax debt negotiators. My sole purpose in life is to save businesses and help them and give them access to a service that they might not otherwise know exists.”
“We come in and just help within the space of tax debt. We help people get back into affordable payment plans, stop legal action, get on with running their business, and then once that’s fixed up, they go back to their everyday adviser.”
“Ignoring debt isn’t an option; it’s not a matter of if the ATO will come after you, but when. Dealing with the issue before enforcement action provides more options and peace of mind.”
“There’s a misconception about ATO compliance; you don’t need to pay off your debt in full to be considered compliant. Setting up a payment plan can suffice.”
“Using experts can also ease the financial burden; with the right specialists, upfront payment may not be necessary.”
“Insolvency might seem like the only way out, but seeking advice from tax debt experts can offer many times better solutions and personal relief from liquidation.”
“Taking the time to address financial issues properly saves time in the long run, avoiding multiple attempts to resolve them in a worse position.”
“Sometimes people get on a payment arrangement that is bad. So, I often say, well, anyone can get a payment arrangement, but it might not be a good one.
“For instance, we have a client that had a payment arrangement of $60,000 a month. It was killing their cash flow. Now, we’ve renegotiated the payment plan down to $32,000 a month. That’s half their outflow. That’s an immediate saving.”
“They’re still compliant. They’re still meeting all their obligations.They’re not subjected to recovery action by the ATO. They’re still going to pay it off, but it also means that they’ve got cash and can continue on. There are things like that that people don’t realise.”
“The other space where it’s super helpful is the interest component. Another had $280,000 debt to the ATO, and $120,000 of that was interest. We were able to do a successful application to reduce that interest, which nearly halves the debt, which then means their payment plan requires lower payments per month… So, there’s solutions like that. When you don’t “eat the frog” and you’re not looking at it, getting nasty letters, and the risk of personal liability that many people are not aware of it can be very overwhelming. I say simple. I shouldn’t say simple because it’s what we do all day every day, but they are relatively simple solutions for the client with the right help.”
Wayne Morris, Director of Fifo Capital, said that the need for specialist finance is akin to what tax debt negotiators offer to SMEs. You need the right specialist for the right instances. But if SMEs don’t get a handle on their ATO debts, they won’t be able to work with any lenders.
“At Fifo, we work with advisers and the business community to help owners understand and access the right specialists.”
“Over 80% of businesses face cash flow issues, often leading to failure. Fifo, like Tax Assure, provides essential expertise to keep businesses running smoothly.”
“You can’t get all the services your business needs from a bank alone. Every business requires a network of specialists for support and advice. Building this network quickly ensures better business outcomes, saving time and money.”
Read now: Mastering cash flow: Essential tips to build financial stability
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