Title: How Small Businesses Can Benefit From the ATO’s Tax Amnesty
Small businesses in Australia have the opportunity to benefit from a tax amnesty offered by the Australian Taxation Office (ATO). The amnesty applies to small businesses that have failed to file their tax returns between the beginning of December 2019 and the end of February 2022. The deadline for the amnesty is fast approaching at the end of this year. In this article, we will delve into the details of the amnesty and explore its benefits for small business owners.
What is the ATO’s Tax Amnesty?
The ATO’s tax amnesty aims to provide relief to small businesses struggling to meet their tax obligations due to the impact of the COVID-19 pandemic and natural disasters. The amnesty applies to tax obligations that expired between the beginning of December 2019 and the end of February 2022 and expire at the end of this year.
To be eligible for the tax amnesty, a small business must have total sales of less than $10 million at the time the original submission is due. A small business, as defined by the ATO, includes a sole trader, company, trust, or partnership that operates a business with an annual turnover of less than $10 million.
According to Tony Greco, general manager of technical policy at the Institute of CPAs, the ATO uses amnesties in situations where it believes there are a significant number of non-compliant taxpayers. Greco says the ATO takes a “carrot and stick” approach. “Show up and we’ll waive your no-show penalties, but don’t do anything and we’ll go after you,” he says.
Why Should Small Businesses Take Advantage of the Tax Amnesty?
Small businesses can benefit significantly from the ATO’s tax amnesty. Emma Tobias, ATO Deputy Commissioner, urges small businesses to take advantage of the amnesty to get back in line with their tax obligations if they have fallen behind. “The last few years have been difficult for many small businesses, as the pandemic and natural disasters have had a significant impact,” says Tobias. “We understand that things like filing ATO forms may have slipped down the priority list, but it’s important to get back on track with tax obligations.”
During the worst of the COVID-19 pandemic, the ATO temporarily halted its tax debt collection activities to assist struggling small and medium-sized businesses before resuming collection activities. However, during 2019-20, around $12 billion was owed by the ATO by small businesses. That has now grown to around the debt that is collectible by the ATO, which includes about $1.6 billion in retirement payments owed to employees.
Much of that is likely owed by very small businesses, such as sole traders, who fell behind in filing with the ATO during lockdowns, wildfires, and floods. The tax amnesty provides an opportunity for small businesses to catch up with their tax obligations and reduce any looming debts or penalties.
How to Take Advantage of the Tax Amnesty?
When filing with the ATO under the amnesty, businesses or their tax professionals will not need to separately apply for a remission of failure to file (FTL) penalties. “All you need to do is file your pending tax returns or activity statements, and we’ll take care of the FTL penalty remission on our behalf,” says Tobias. “You may see an FTL ticket on your account for a short period of time, but don’t worry, we’ll remit it.”
The amnesty does not apply to retirement obligations and excludes other administrative penalties, such as penalties associated with the Taxable Payment Information System. Businesses that have not filed because they have ceased operations should inform their registered tax professional or the ATO directly.
Tony Greco says that amnesties have been used selectively in the past, with the latest amnesty being for retirement guarantee payments, where employers had the opportunity to make up previous underpayments. Some 28,300 employers have come forward and recovered more than $910 million in underpayments, it says. “This shows the power of amnesties to encourage people to return to the tax system,” says Greco.
Additional Piece:
As a small business owner, filing taxes can be a mundane and time-consuming task. However, it is an obligation that cannot be neglected. While the ATO’s tax amnesty provides relief, it is essential to keep up with your tax obligations and file your returns regularly to avoid penalties.
Here are some tips to help small business owners stay on top of their tax obligations:
1. Keep Accurate Records
Keeping accurate records is crucial for small businesses in meeting their tax obligations. Accurate record-keeping enables small business owners to claim deductions accurately and reduces the likelihood of an audit. Maintaining a record of all financial transactions and expenses can help small businesses file tax returns efficiently and avoid errors.
2. Understand Your Deductions
Understanding tax deductions that apply to your small business can help you maximize your deductions and reduce your tax liability. Some common tax deductions for small businesses include costs related to home-based offices, employee salaries, and trade-related expenses.
3. Seek Professional Assistance
Small business owners can seek the services of tax professionals to help navigate complex tax obligations. A tax professional can help identify deductions, meet deadlines, and ensure compliance with tax regulations. The cost of hiring a tax professional may be tax-deductible, providing additional relief to small businesses.
In conclusion, small businesses in Australia can benefit significantly from the ATO’s tax amnesty. The amnesty provides an opportunity to catch up with tax obligations and reduce debt and penalties. While the amnesty provides relief, small businesses must stay on top of their tax obligations to avoid penalties and reduce their tax liability. Keeping accurate records, understanding deductions, and seeking professional assistance are some effective ways small businesses can meet their tax obligations.
Summary:
The ATO’s tax amnesty applies to small businesses that have failed to file their tax returns between the beginning of December 2019 and the end of February 2022. The deadline for the amnesty is fast approaching at the end of this year. To qualify for the amnesty, a small business must have total sales of less than $10 million at the time the original submission is due. Small businesses can benefit significantly from the amnesty by catching up with tax obligations and reducing debt and penalties. Record-keeping, understanding deductions, and seeking professional assistance can help small businesses stay on top of their tax obligations.
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The amnesty applies to tax obligations that expired between the beginning of December 2019 and the end of February 2022 and expire at the end of this year. To be eligible, a small business must have total sales of less than $10 million at the time the original submission is due.
Tony Greco, general manager of technical policy at the Institute of CPAs, says the ATO uses amnesties in situations where it believes there are a significant number of non-compliant taxpayers.
The ATO has an amnesty for small businesses that have not filed, but it expires at the end of this year. Luis Enrique Ascuí
Greco says the ATO takes a “carrot and stick” approach. “Show up and we’ll waive your no-show penalties, but don’t do anything and we’ll go after you,” he says.
Emma Tobias, ATO Deputy Commissioner, urges small businesses to take advantage of the amnesty to get back in line with their tax obligations if they have fallen behind.
“The last few years have been difficult for many small businesses, as the pandemic and natural disasters have had a significant impact,” says Tobias. “We understand that things like filing ATO forms may have slipped down the priority list, but it’s important to get back on track with tax obligations.”
A small business, as defined by the ATO, includes a sole trader, company, trust, or partnership that operates a business with annual turnover of less than $10 million.
During the worst of the COVID-19 pandemic, the ATO temporarily halted its tax debt collection activities to assist struggling small and medium-sized businesses, before resuming collection activities.
During 2019-20, around $12 billion was owned by the ATO by small businesses. That has now grown to around the debt that is collectible by the ATO; which includes about $1.6 billion in retirement payments owed to employees.
Much of that is likely owed by very small businesses, such as sole traders, who fell behind in filing with the ATO during lockdowns, wildfires and floods.
When filing with the ATO under the amnesty, businesses or their tax professionals will not need to separately apply for a remission of failure to file (FTL) penalties.
“All you need to do is file your pending tax returns or activity statements, and we’ll take care of the FTL penalty remission on our behalf,” says Tobias. “You may see an FTL ticket on your account for a short period of time, but don’t worry, we’ll remit it.”
The amnesty does not apply to retirement obligations and excludes other administrative penalties, such as penalties associated with the Taxable Payment Information System.
Businesses that have not filed because they have ceased operations should inform their registered tax professional or the ATO directly.
Greco says that amnesties have been used selectively in the past, with the latest amnesty being for retirement guarantee payments, where employers had the opportunity to make up previous underpayments.
Some 28,300 employers have come forward and recovered more than $910 million in underpayments, it says.
“This shows the power of amnesties to encourage people to return to the tax system,” says Greco.
- The advice provided in this article is general and is not intended to influence readers’ decisions about investments or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decision.
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https://amp.smh.com.au/money/tax/ato-urges-small-business-to-come-clean-on-30-billion-of-debt-20230608-p5df5g.html
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