You have to be living in a cave so as not to know people are going through tough times.
Businesses are, too.
If your business is on par with last year’s, you are doing well. Many of my clients, especially in retail, are quoting turnover falls of between 10% and 20%.
Then we have the ATO, who have decided that they have been kind enough and are polishing the guillotine, getting it ready for extended use.
That’s because outstanding debts owed to the Tax Office are pushing businesses into administration and even liquidation. Many are taking advantage of Business Restructuring in the hope of survival.
The ATO has a problem. $50Bn is owed to them by me, you and a few others. In 2019, it was only $27Bn. So, in nearly 5 years debt levels have spiralled by 100%. That’s a lot.
And it is not surprising that the ATO is calling in the big boys with larger muscles than you and I.
Late last year, one of my contacts in the liquidation and restructure space told me there will be an uptick in his line of work. He was not wrong.
Within our client base, we have seen clients raising the question. We have also started alerting clients to potential cashflow issues as we see them.
There are three issues.
- Rising costs and failure to pass them on as price rises have squeezed margins, profit and cashflow.
- Businesses are ignoring rising ATO debts
- Interest rate rises have hampered the ability of businesses to repay loans.
The recent budget was no help. I am all in when it comes to helping people pay bills, so the electricity rebate was good, but paying $8.7bn for hydrogen production at the expense of keeping businesses alive, which is more critical at the moment, seems like a missed opportunity. It just shows that our politicians do not live in the real world or have their priorities a bit messed up.
In April 2024, insolvencies were about 50 per cent higher than pre-pandemic levels. These were brought about mostly because of bank borrowing and ATO debts.
But the ATO is being a lot more difficult. Getting payment plans in the past was easy. Now? Well, let’s say you will find it easier to remove the tooth of a tiger who has not eaten for a week.
They are placing emphasis on real compliance on historical matters – have BAS been lodged on time? Have tax returns been lodged? Is the lodgement system up to date etc? If you fail these, in the eyes of the ATO, you are a villain.
We have seen the position with the ATO move and it is a full turnabout. A couple of years ago they were a warm
Managing ATO debts is step 2 of our 9 steps to working less, earning more and creating wealth. If you would like to know more about our 9-step signature system, please contact the WOW! Advisors team on 07 3161 9548 or email info@wowadvisors.com.au.