Minimising clients (and your own) potholes in the road back to business-as-usual

Rightly or otherwise, all signs are pointing to life and the economy heading back to a business-as-usual status — and the world of tax, and tax compliance, will follow closely behind.

When COVID-19 hit the Australian economy a year ago, the ATO started to redirect its resources and support to businesses trying to stay afloat, as many businesses struggled to deal with huge reductions in turnover, extreme demands on cash flow, and struggles to pay staff and outgoings.

To assist businesses negatively affected by the pandemic, some of the options the ATO made available included:

  • Extra time to lodge and pay tax
  • Remitting certain interest and penalties
  • Allowing businesses to vary PAYG instalment amounts, some down to zero.

The ATO also administered various government incentive programs, such as JobKeeper, which as we all know has just closed.

However, ATO staff previously redeployed to manage pandemic assistance programs have or are about to return to their previous roles and the ATO focus is returning to compliance, enforcement and debt recovery.

Taxpayers and their agents can no longer expect that blanket lodgment extensions will be the norm, and that ATO leniency around failures to meet lodgment and payment deadlines will continue.

The ATO’s focus will be on compliance. Taxpayers must ensure they meet their reporting, lodgment and payment obligations or face ATO compliance action. Where extensions of time are needed, requests must be made through the official pathways and within the required timeframes.

“COVID normal” is no longer the norm when it comes to tax compliance.

Early intervention dusted off
The ATO has been provided with funding under the Black Economy program to better understand the drivers behind agent behaviour. With the end of JobKeeper, it has also started to examine the integrity of the program through its compliance microscope.

Its Early Intervention Strategy still has muscle, which can start to be flexed again with a view to making prevention and early compliance action a key plank in reinvigorating a tax revenue base that has seen recent unavoidable shortfalls.

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