Extracted from The Australian Financial Review July 28, 2024
The Australian Taxation Office has reiterated its position of strong and deliberate action to deal with those who ignore their obligations and refuse to engage to pay their outstanding amounts. Vowing to keep up this hard-line approach in recovering overdue debts even if it spells the end for companies resulting in their financial collapse.
In late 2022, the ATO implemented a “gradual reset” before it returned to a “business as usual” approach, having deliberately paused the majority of debt recovery actions across the corporate sector in the early stages of the pandemic.
A spokesperson for the ATO recently said; It’s the ATO’s responsibility to ensure a level playing field, protecting other creditors, and supporting those who are doing the right thing and paying on time.”
As an example, a demand issued from the ATO for payment of $1.2 million owed by West Australia’s Margaret River based craft beer group Black Brewing Co, was said to be the catalyst for the appointment of administrators over the group last month. It has since been revealed that from June 2023, the business had used payments that were due to the ATO to [help] fund its operations.
The administrators have reported that following on from the pandemic, cash flow difficulties were in part funded by deferring ATO payment obligations, which worsened over time. And from June 2023, the company relied on the ATO to fund its trading losses and deteriorating financial position. Resulting in the tax office issuing director penalty notices and a statutory demand even though payment plans had been agreed to.
But you don’t have to owe $1.2M to be in the spotlight of the ATO, we are regularly seeing examples of similar action being taken against businesses with as little as $100K outstanding.
By utilising one of our factoring products, you can ensure that your cash flow remains constant by speeding up that credit cycle often exploited by your customers allowing you to meet your own commitments on time.
