ATO tells small businesses to come clean

Those with overdue tax returns or business activity statements have until 31 December to come clean as part of the tax office’s amnesty.

Small businesses will have till 31 December 2023 to come clean to the ATO on overdue income tax returns, fringe benefits tax returns or business activity statements as part of the tax office’s amnesty.

The ATO’s amnesty was announced as part of the 2023-24 budget and applies to tax obligations originally due between 1 December 2019 and 28 February 2022.

However, the tax office encouraged small businesses to lodge obligations even if they were outside the amnesty period as it would consider each circumstance and could reduce possible penalties.

ATO assistant commissioner Emma Tobias urged small businesses to take advantage of the amnesty and get sorted their tax commitments.

“The past few years have been tough for many small businesses, with the pandemic and natural disasters having a significant impact. We understand that things like lodging ATO forms may have slipped down the list of priorities,” said Ms Tobias.

“But it is important to get back on track with tax obligations. Lodging these forms are not optional, so we hope our amnesty will make it easier for impacted small businesses to get back on track.”

“We encourage all businesses to lodge any overdue forms even if they are outside the eligibility period. Whilst forms outside the amnesty eligibility criteria will attract failure to lodge (FTL) penalties, the ATO will consider your circumstance and may remit such penalties on a case-by-case basis.”

The ATO said forms lodged with it under the amnesty would not require businesses or tax agents to separately request a remission of FTL penalties.

“All you need to do is lodge your outstanding tax returns or activity statements and we’ll take care of the FTL penalty remission from our end,” said Ms Tobias.

“You might see an FTL penalty on your account for a short period of time, but don’t worry, we will remit it.”

She also warned businesses that outstanding lodgements could be seen as a red flag to the ATO that a small business was not engaged in the tax system and advised firms to lodge all overdue tax commitments without concern for the possible outstanding payments.

“We understand that small businesses may be worried about paying an amount owing in their overdue lodgment. If you are unable to make full payment of your debt, remember we can work together with you or your registered tax or BAS agent to figure out the right solution for you,” said Ms Tobias.

“We want to make this process easy and encourage small businesses to do the right thing. If you have a registered tax or BAS agent, now is a good time to reach out to them to make sure you are up to date with your tax affairs.”

“Taxpayers still have an obligation to lodge overdue forms during the amnesty period and we will continue to work with them to help ensure they meet their obligations.”

The tax office advised that to be eligible for the amnesty the small business must have had an aggregated turnover of less than $10 million when the original lodgement was due.

The ATO said small businesses had from 1 June 2023 to 31 December 2023 to take advantage of the amnesty but warned superannuation obligations and other administrative penalties such as those associated with the Taxable Payments Reporting System were not included.

This article was originally featured in Accountants Daily.