Media Spotlight
The economic headwinds battering Australian small businesses show no signs of abating. As inflation rages and consumer confidence withers, my team at AVA Advisory has been inundated with calls from business owners struggling under mounting debt loads – especially unpaid tax obligations.
The latest figures from the Australian Taxation Office (ATO) are staggering: total tax debt owed has doubled in just a few years to over $52 billion. A whopping $34 billion of that, nearly two-thirds, is owed by small and medium enterprises across the country. Construction firms, retailers, hospitality operators – businesses in sectors hit hardest by rate hikes and spending pullbacks make up many of the debt cases we’re assisting.
Sadly, as this debt tsunami has swelled, the ATO’s collection tactics have become increasingly aggressive and indiscriminate from what I’ve witnessed. We’re hearing more reports of the Tax Office resorting to heavy-handed actions like garnishing business bank accounts, initiating winding-up proceedings, issuing director penalty notices to pursue owners’ personal assets, and damaging credit ratings over unpaid amounts.
Just a few months ago, ATO data revealed it was forcing around 40 companies into liquidation every single week through court actions. While this severe debt recovery approach may be intended to compel compliance, it runs a serious risk of pushing more small businesses already teetering on the brink into full insolvency – the exact opposite of what’s needed during an economic downturn.
There are undoubtedly some cases where liquidation is the only viable endgame. But the ATO must exercise prudence and recognise that many of these tax debts have spiralled not due to intentional avoidance, but because of circumstances largely outside owners’ control. Rates up over 4% in under 18 months, runaway inflation, supply shortages – Australian small businesses have been pummelled from all sides while lacking a financial cushion.
Empathy and a degree of flexibility from creditors, including the Tax Office, could mean the difference between saving a viable business able to eventually repay what’s owed versus being forced into insolvency that recoups mere cents on the dollar. I’m reminded of the backlash the controversial Robodebt scheme sparked regarding heavy-handed government collection tactics toward vulnerable individuals. We must avoid a similar scenario playing out in the small business sector.
I wholeheartedly understand the ATO’s imperative to recover unpaid tax revenues. Taxes fund critical public services we all rely upon. However, there’s a careful balance to strike – especially in today’s fragile environment – between enforcing compliance and destroying otherwise sustainable small enterprises through overly punitive debt recovery actions that ultimately achieve little.
At AVA Advisory, our insolvency experts have successfully helped numerous small business clients reduce their overall debt loads by as much as 80% through careful restructuring and creditor negotiation, including realistic tax debt relief solutions with the ATO. We’ve witnessed first-hand how a more patient, tailored repayment structure can preserve jobs, economic activity, and a future revenue stream for the Government – as opposed to forced closures that abruptly terminate any chance of recovering outstanding amounts.
For small business owners drowning in a sea of tax and creditor debts, the situation can feel utterly hopeless. But I implore you, don’t lose hope. Seek professional guidance about your restructuring options as soon as possible – the sooner we can engage the ATO and map out a pragmatic path forward, the higher the chances of getting your enterprise back on stable financial footing.
At the end of the day, the Tax Office and government should have a vested interest in keeping viable small businesses afloat during turbulent periods. These are the very engine rooms that will propel Australia’s economic recovery once calmer waters return. A facilitative, solutions-oriented approach working collaboratively with small business owners stick-handling through adversity – rather than punitive debt collection at all costs – is surely the wiser course.
Media Spotlight
The economic headwinds battering Australian small businesses show no signs of abating. As inflation rages and consumer confidence withers, my team at AVA Advisory has been inundated with calls from business owners struggling under mounting debt loads – especially unpaid tax obligations.
The latest figures from the Australian Taxation Office (ATO) are staggering: total tax debt owed has doubled in just a few years to over $52 billion. A whopping $34 billion of that, nearly two-thirds, is owed by small and medium enterprises across the country. Construction firms, retailers, hospitality operators – businesses in sectors hit hardest by rate hikes and spending pullbacks make up many of the debt cases we’re assisting.
Sadly, as this debt tsunami has swelled, the ATO’s collection tactics have become increasingly aggressive and indiscriminate from what I’ve witnessed. We’re hearing more reports of the Tax Office resorting to heavy-handed actions like garnishing business bank accounts, initiating winding-up proceedings, issuing director penalty notices to pursue owners’ personal assets, and damaging credit ratings over unpaid amounts.
Just a few months ago, ATO data revealed it was forcing around 40 companies into liquidation every single week through court actions. While this severe debt recovery approach may be intended to compel compliance, it runs a serious risk of pushing more small businesses already teetering on the brink into full insolvency – the exact opposite of what’s needed during an economic downturn.
There are undoubtedly some cases where liquidation is the only viable endgame. But the ATO must exercise prudence and recognise that many of these tax debts have spiralled not due to intentional avoidance, but because of circumstances largely outside owners’ control. Rates up over 4% in under 18 months, runaway inflation, supply shortages – Australian small businesses have been pummelled from all sides while lacking a financial cushion.
Empathy and a degree of flexibility from creditors, including the Tax Office, could mean the difference between saving a viable business able to eventually repay what’s owed versus being forced into insolvency that recoups mere cents on the dollar. I’m reminded of the backlash the controversial Robodebt scheme sparked regarding heavy-handed government collection tactics toward vulnerable individuals. We must avoid a similar scenario playing out in the small business sector.
I wholeheartedly understand the ATO’s imperative to recover unpaid tax revenues. Taxes fund critical public services we all rely upon. However, there’s a careful balance to strike – especially in today’s fragile environment – between enforcing compliance and destroying otherwise sustainable small enterprises through overly punitive debt recovery actions that ultimately achieve little.
At AVA Advisory, our insolvency experts have successfully helped numerous small business clients reduce their overall debt loads by as much as 80% through careful restructuring and creditor negotiation, including realistic tax debt relief solutions with the ATO. We’ve witnessed first-hand how a more patient, tailored repayment structure can preserve jobs, economic activity, and a future revenue stream for the Government – as opposed to forced closures that abruptly terminate any chance of recovering outstanding amounts.
For small business owners drowning in a sea of tax and creditor debts, the situation can feel utterly hopeless. But I implore you, don’t lose hope. Seek professional guidance about your restructuring options as soon as possible – the sooner we can engage the ATO and map out a pragmatic path forward, the higher the chances of getting your enterprise back on stable financial footing.
At the end of the day, the Tax Office and government should have a vested interest in keeping viable small businesses afloat during turbulent periods. These are the very engine rooms that will propel Australia’s economic recovery once calmer waters return. A facilitative, solutions-oriented approach working collaboratively with small business owners stick-handling through adversity – rather than punitive debt collection at all costs – is surely the wiser course.
