Smart alternatives to ATO payment plans

As the Australian Taxation Office increases pressure to collect outstanding taxes, businesses need to be proactive in exploring all available options to manage debts effectively.

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Finlease recognises that managing ATO tax arrears can be challenging for businesses, especially with recent changes in recovery practices.

Finlease Chief Executive Officer Mark O'Donoghue provides some alternative financing options to help companies and individuals meet their obligations.

The current state of play

Mark said that the ATO's approach to managing arrears has become more aggressive, especially for businesses with debts over $100,000.

The ATO is now:

Registering defaults on company credit files for any "unaddressed" arrears over $100,000.

Becoming less receptive to payment plans.

If a payment plan is requested, the ATO now requires more detailed financial submissions for debts exceeding $200,000.

For businesses with arrears:

Under $200,000: A 10 per cent deposit is required, with a typical repayment term of 18 months.

Over $200,000: A 10 per cent deposit plus supporting financial information must be provided to secure a plan, making cash flow management more difficult.

For a working example, on a $200,000 debt, a standard ATO payment plan might look like:

Month 1: $20,000

Months 2-18: $11,400