You Are Owed $45Bn

You Are Owed $45Bn

It doesn’t. But in a way it does.

I mean can you imagine the smile on my face if all of a sudden I saw $45Bn in my bank account?

Can you imagine your face?

It’s the amount of money owed to the ATO from taxpayers and that is why it is relevant to you.

$45bn is a lot. And it’s a scary figure.

There’s more. The is also a ‘tax gap’. This is the difference between what we pay the ATO and what the ATO thinks we should be paying. That’s another $33Bn.

Now our government is like a business. Without cash, it dies. So, it will do whatever is necessary for its survival. Just like you and I. And that means chasing what you are owed and trying to get whatever you can through the doors (or bank account)

That is why the ATO have started to ramp up communication. There are awareness campaigns, advice on actions the ATO could take including director penalty notices (DPNs), garnishee, disclosure of business tax debts or legal remedies including insolvency.”

To give you an idea during the pandemic (2 years) only a handful of garnishees were issued. In 2022 over 18,000 were issued. That is over 50 a day.

They are also being aggressive on other fronts. We are seeing automatic fines for late filing of BAS. And trying to get them cancelled is proving difficult too. Before we accountants used all kinds of excuses to get a fine cancelled. Now if we give an excuse we are expected to prove it.

It will get worse.

What does that mean for you and me?

Well, innocent or not the ATO will have eyes on you. If you are late on BAS or tax return lodgement you will be on the ‘naughty list’. Late payment of taxes will put you on the naughty list too. Non-lodgement and non-payment is likely to result in seeing the headmaster for a whipping.

If the ATO uses benchmarks for your industry and you are outside what is expected then don’t be surprised if you get a call to explain why you are different.

If the ATO thinks you might be a bit aggressive with avoiding taxes then expect a call too even if you may be right. They have started using a colour code system. If you are green you are good. If amber expects a call from Hector the Taxman for an explanation. Red and the boys in suits will be around to look at your records.

One thing I will tell you from experience. I have seen strong people crumble when the ATO comes knocking on the door and I know most come backing telling me it is one of the most stressful things you can go through. And that is because you are deemed guilty until you prove otherwise. And that is why I always say what do you want? More sleep and maybe less money or terrible sleep and a lot less money?

We always recommend you take audit insurance. Like all insurance, you will hate paying it but be grateful you did when an audit comes along. And based on what is owed and the scale of the tax gap I am guessing there will be a lot more audits coming our way.