2020 has been a year like no other. Uncertainty continues to plague the current economic environment, but for a number of small businesses this year’s government stimulus and Australian Taxation Office (“ATO”) concessions have helped contribute to incoming cash flows and helped reduce or, in some cases delay, outgoings such as tax payments.
When COVID-19 hit the Australian economy in March, the ATO started to redirect its resources and focus to support small business owners as businesses scrambled to keep their doors open. Many struggled to deal with drastic reductions in business turnover, managing cash flow and the ability to pay their staff and their debts.
To assist businesses negatively impacted by COVID-19, some of the options the ATO made available included:
- Extra time to lodge and pay taxes;
- Remitting certain interest and penalties; and
- Allowing businesses to vary PAYG instalment amounts to zero.
The ATO also administered various government incentive programs, such as JobKeeper.
In 2021 as the ATO shifts its agenda back to more traditional interests including review and audit programs, this will see greater focus on small business activity.
ATO staff who were redeployed to manage COVID-19 assistance programs have returned to their previous roles.
This means the ATO is reopening its files and returning to business as usual. We have recently seen it recommence its outbound engagement with taxpayers who have outstanding payments or lodgement obligations, with the aim of reminding taxpayers of their obligations and/or willingness to work with them if they still need support to stay on track. They have also recommenced stalled and new audit activity.
Never has there been a more important time for businesses to maintain communication with the ATO either directly, or through your advisor, and to keep your financial records and accounts up to date.
We recommend our clients continue with on-time lodgements with the ATO, even if you are not in a position to pay taxes straight away. While payment deferrals have been an option during COVID-19, they are not necessarily the best option for a business in the long-term. Meeting lodgement obligations will make things easier in the long run as it ensures you stay on top of your true financial position, the benefits of which are many.
As the ATO looks ahead, digital and data will be key to its strategies in the future.
Further and improved data matching capabilities are leading to increased, and better focussed, audit activity.
It continues to be important for businesses to ensure records are complete, consistent and reconcile to limit unnecessary enquiries.
With a plan that incorporates keeping your financial records up to date and regular cash flow forecasts, you will also have the confidence to implement initiatives that will lead your business to success in 2021.
Pilot are here to help with managing your ATO correspondence, along with your 2021 planning. Contact Murray Howlett or your Pilot Advisor on 07 3023 1300 for assistance.