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'Don't stick your head in the sand' when it comes to paying tax debts, ATO saysAdvertising Feature

SUPPORT: The ATO has a range of support and advice available to anyone struggling with a tax debt. Photo: Shutterstock

As the economy begins to emerge from the restrictions of the COVID-19 pandemic, the Australian Taxation Office (ATO) is starting to shift its focus back to firmer debt collection practices.

The ATO paused heavy collection activities for the majority of the last two years while individuals, businesses and the economy were grappling with the ongoing effects of lockdowns and border closures.

Now that these events are behind us, ATO Deputy Commissioner Vivek Chaudhary says the ATO is resuming debt collection activities while emphasising working with taxpayers to resolve their situation through engagement rather than enforcement.

"We have a range of support and assistance we can provide, and we can tailor a solution to a taxpayer's unique circumstances. What is critical is that taxpayers or their representatives talk to us and respond to our calls," Mr Chaudhary said.

"We understand that a lot of people - especially small businesses - have done it tough through COVID and may now have a tax debt. Our message is - don't stick your head in the sand - even if you can't pay the full amount owed straight away, please contact us or your registered tax professional to discuss, and we will work with you to set up an appropriate payment arrangement. We cannot help taxpayers who do not engage with us."

If you need help paying a tax debt, options are available. These options will vary depending on your circumstances and the type of debt you owe and include:

Payment plans

With a payment plan, you pay back your tax debt in weekly, fortnightly or monthly instalments until the debt is cleared.

Individuals, sole traders, businesses, and tax practitioners can sign up for a payment plan on behalf of their clients.

Interest-free payment plans for overdue activity statement amounts

Eligible small businesses may be able to set up an interest-free payment plan to repay the tax debt within 12 months.

Your business must meet certain requirements, including an annual turnover of less than $2 million and have recent amounts owed from an activity statement of $50,000 or less overdue for no longer than 12 months.

You must also agree to make regular payments via direct debit.

Deferral of HELP or SFSS compulsory repayment

You may be able to defer or amend your HELP debt or overseas levy if payments would cause you severe hardship or if there are other serious issues affecting you, such as a natural disaster, illness or death.

What will the ATO have in its crosshairs this tax time?Advertising Feature

CLOSE LOOK: The ATO will have work-related expenses and crypto capital gains in its sights this tax season. Picture: Shutterstock

Each year the Australian Tax Office identifies different focus areas to zero in on when assessing tax returns.

These are often elements of a return that are easy to make mistakes with or inadvertently overlook. "The ATO is targeting problem areas where we see people making mistakes," Assistant Commissioner Tim Loh explained.

Information provided by the ATO shows that in 2020-21, $22.3 million in penalties were levied against 2218 individual taxpayers, with the most common penalty reasons being "intentional disregard of a taxation law, recklessness, and failure to take reasonable care".

With the shift to remote and work-from-home arrangements, plus the rise in cryptocurrency investing, it's no surprise the ATO will be paying close attention to these. This year's focus is on record-keeping; work-related expenses; rental property income and deductions; capital gains from crypto assets, property, shares.

The ATO advised taxpayers to keep accurate records of work-related expenses, rental property income, and deductions and capital gains from investments to avoid getting caught out with incorrect or incomplete information when it comes time to lodge their tax returns.

[We] will be taking firm action to deal with these taxpayers who are gaining an unfair advantage...

- Australian Tax Office

Using apps to track expenses, such as MyDeductions in the ATO app, can help ensure accurate and complete information for tax time. Using MyDeductions to record expenses and the ATO app to lodge a return, plus waiting until pre-fill information about income, interest and investments has populated in your myTax account, can make lodgment easier.

"You can check if your employer has marked your income statement as 'tax ready' and if your pre-fill is available in myTax before you lodge. That way, an amendment doesn't need to be made later, which could result in delays to your refund," Mr Loh said. "While we receive and match a lot of information on rental income, foreign-sourced income and capital gains events involving shares, crypto assets or property, we don't pre-fill all that information."

The ATO has a warning for anyone who deliberately tries to increase their refund or falsify records. "[We] will be taking firm action to deal with these taxpayers who are gaining an unfair advantage over the rest of the Australian community who are doing the right thing."