ATO tax relief for small businesses: more detail needed on new measures

Yesterday’s announcement by the Federal Government that the Australian Taxation Office will provide temporary relief for small businesses unable to meet their tax obligations will be welcome news for many business owners.

We heard Treasurer Jim Chalmers outline relief measures including more generous payment plans, remission of interest and penalties, and support in various PAYG instalments where there’s been a downturn in taxable income.

Importantly, compliance actions will be limited across the worst-affected industries and Mr Chalmers says some debt collection activity may be paused, where appropriate.

These emergency measures are being introduced against the backdrop of a marked increase in insolvency statistics over the past three years, driven by an acceleration of the ATO’s enforcements, which have included director penalty notices, garnishees and statutory demands.

The degree to which small and medium sized businesses will benefit from this temporary relief will become clearer as more detail emerges about the true extent of the ATO’s generosity.

What we do know is that the fuel price shock driven by the conflict in Iran has had a significant and immediate impact on businesses in the transport industry, and there are input cost-related flow-on effects for
all businesses without fixed price arrangements in place.

This situation has all the hallmarks of the post-Covid cost spike that impacted building and construction operators who had fixed price contracts with their principals.

We will be closely watching the rollout of these relief measures and will continue to help businesses successfully navigate these extraordinary circumstances.