For businesses in Australia, tax debt can be a serious and stressful issue. However, with the right support and strategy, it doesn’t need to be. Not only is it possible for a business to recover from tax debt, but it’s possible for it to thrive at the other end.

To get to that point, though, you do need to take proactive steps to address the situation, and seek support from emergency accountants that can quickly move to address the problem.

How to deal with tax debt

The first step is to understand why you have tax debt in the first place. There is likely some underlying weakness in the business’ financial position that has led to it owing more to the ATO than it has been able to pay. Once you’ve worked with EPAS to fully audit your business and understand the root cause of the tax debt, we’re armed with the information that we need to reach out to the ATO.

The most likely outcome is that we’ll be able to establish a payment plan with the ATO. This allows the business to pay off the debt over time, in smaller, more manageable instalments while still maintaining the cash flow it needs to operate as normal. 

One of the reasons that you want EPAS in your corner, however, is that the ATO may also be willing to waive or reduce penalties if the business can demonstrate financial hardship or extenuating circumstances. You need an expert negotiating partner to maximise the amount of debt that the ATO will be willing to write off, but it can be very significant indeed – even cents on the dollar. This is because the ATO has the default position that it would rather keep businesses open, so will do what is necessary to achieve that outcome. EPAS will help you to properly represent your business’ challenges to the ATO.

What if I just ignore the problem?

There are serious consequences for failing to address tax debt. The ATO has the power to issue garnishee notices, which can see funds taken directly from a business's bank accounts, or it may seek to wind up the business altogether.

The ATO is also less likely to be a flexible in negotiation with organisations that it perceives to be avoiding their obligations. 

Therefore, it's essential to act as soon as you become aware that your business has an ATO tax debt.

In summary, while tax debt can be a stressful and challenging issue for businesses in Australia, recovery is possible. Communication with the ATO, seeking professional advice, and developing a repayment plan are all essential steps in recovering from tax debt. By taking a proactive approach and addressing the issue head-on, a business can get back on track and avoid further financial difficulties.

The recovery

One of the key benefits of working with EPAS for your emergency accounting is that, while negotiating with the ATO, we are also going to help you identify areas where your business can reduce costs and improve cash flow. This is especially important when dealing with tax debt, as the longer a business takes to address the issue, the more interest, and penalties they will incur. By quickly identifying areas where costs can be reduced, businesses can free up cash flow and make the necessary payments to the ATO.

But more than anything else, one of the things that our clients tell us they value most about partnering with EPAS is the peace of mind that we provide. It can be incredibly stressful to have tax debt hanging over a business, and more than a few of our clients were losing sleep over the fate of their businesses and personal financial situations before coming to us. 

With our help, you will have a firm and sustainable plan of action that will not only help you get back on track. We will help you address areas which are negatively impacting on cash flow, identify opportunities to both cut costs and develop new revenue streams, and understand the best financial opportunities for your business going forward. Once the tax debts have all been cleared, the work you do with EPAS under emergency circumstances will set your business up for long-term growth and success. 

Don’t wait – if you are facing ATO tax debts, contact us today.