What Small and Medium Businesses can expect from the ATO in 2024.

As a seasoned business debt solutions adviser to small and medium businesses all over Australia, I have seen many ups and downs in our economy over the years. After a lull during the pandemic, it is clear that corporate and personal insolvencies are on the rise once again.Today, I’d like to share my insights on what 2024 might hold for small and medium businesses (SMBs) in Australia, particularly in relation to the Australian Taxation Office ATO).
business ato 2024

Economic Outlook

The economic growth is forecasted to drop to 1.5% in the 2024 financial year, before rising to 2.25% the following financial year. 1 Inflation is expected to fall to 3.25% from current highs of around 7.8% in December 2022. 2 This means that while we may see a slowdown in the economy, there is hope for improvement in the near future.

Consumer Spending

According to a 2023 report from the Council of Small Business Organisations Australia (COSBOA) and Square In (the owners of the likes of AfterPay and other big payments-sector brands with copious amounts of consumer spending data) 3 , median spending across every sector is slower in January 2024 than in January 2023. This trend is likely to continue into 2024, with 69% of survey respondents reporting cuts to their discretionary spending in the final months of 2023.

However, it’s not all “doom and gloom”. The relative stability of spending on entertainment and transportation correlates with consumer research conducted in November 2023, where individuals indicated that they would most likely spend more on food and drink, entertainment, and travel and experiences in 2024. 4

Business Insolvencies

After a challenging 2023, which saw inflation stretch profit margins and business insolvencies surge, projections from CreditorWatch suggest business closures will ramp up in the first half of 2024. 5 The rate of external administrations is picking up pace, as pandemic-era leniency from creditors, including the ATO, draws to a close.

The ATO’s Approach to Small Business Debt in 2024

The ATO has been taking a more proactive approach to debt collection, particularly for small businesses. Here are some key points to note: 

ATO’s Corporate Plan: On 27 July 2023, the ATO announced its Corporate Plan for 2023-2024 to 2026-2027. The plan aims to improve small business tax performance, multinational tax performance, and superannuation guarantee integrity.

1. Debt Recovery Strategy: The ATO’s aggressive approach to taxpayer refunds stems from its intensified debt recovery strategy revealed in its Corporate Plan. The ATO is becoming less inclined to entertain payment arrangements, especially where they propose terms of greater than two years.

2. Increased Enforcement Actions: The ATO has increased the workforce in its debt collection department. The number of enforcement actions from the tax office is expected to hit pre-COVID levels in 2023. The ATO has started issuing warning notices to small businesses with tax debts of more than $100,000 and well as a marked increased in Director Penalty Notices (DPNs).

3. Increased Enforcement Actions: The ATO has increased the workforce in its debt collection department. The number of enforcement actions from the tax office is expected to hit pre-COVID levels in 2023. The ATO has started issuing warning notices to small businesses with tax debts of more than $100,000 and well as a marked increased in Director Penalty Notices (DPNs).

4. Engagement with Taxpayers: If taxpayers fail to engage with the ATO to satisfy their outstanding debts, enforcement actions may be escalated. The ATO has the discretion to issue garnishee notices and director penalty notices, report outstanding tax debts to a Credit Reporting Bureau, and commence legal action.

As an expert adviser in ATO debt advice and business debt solutions, I can help you navigate these changes and find the best path forward for your business. If you have any questions or need advice, don’t hesitate to reach out to me at AVA Advisory on 1300 181 220. 

Looking Forward

While 2024 may present some challenges for SMBs, it’s important to remember that every challenge presents an opportunity. As experienced business debt solutions advisers, myself and the team at AVA Advisory can help you navigate these challenges and find the best path forward for your business. If you have any questions or need advice, don’t hesitate to reach out to us at AVA Advisory.

Remember, it’s not about predicting the future, but preparing for it.

If you’re a small or medium business owner and want to prepare for 2024, don’t hesitate to reach out to me directly. The team at AVA Advisory is here to help you navigate the challenges and seize the opportunities that the future holds. Contact us today to schedule an obligation-free consultation.

This blog post is for informational purposes only and should not be taken as legal or financial advice. Always consult directly with a professional business debt advisor or insolvency professional for personalised advice.

Economic Outlook

The economic growth is forecasted to drop to 1.5% in the 2024 financial year, before rising to 2.25% the following financial year. 1 Inflation is expected to fall to 3.25% from current highs of around 7.8% in December 2022. 2 This means that while we may see a slowdown in the economy, there is hope for improvement in the near future.

Consumer Spending

According to a 2023 report from the Council of Small Business Organisations Australia (COSBOA) and Square In (the owners of the likes of AfterPay and other big payments-sector brands with copious amounts of consumer spending data) 3 , median spending across every sector is slower in January 2024 than in January 2023. This trend is likely to continue into 2024, with 69% of survey respondents reporting cuts to their discretionary spending in the final months of 2023.

However, it’s not all “doom and gloom”. The relative stability of spending on entertainment and transportation correlates with consumer research conducted in November 2023, where individuals indicated that they would most likely spend more on food and drink, entertainment, and travel and experiences in 2024. 4

Business Insolvencies

After a challenging 2023, which saw inflation stretch profit margins and business insolvencies surge, projections from CreditorWatch suggest business closures will ramp up in the first half of 2024. 5 The rate of external administrations is picking up pace, as pandemic-era leniency from creditors, including the ATO, draws to a close.

The ATO’s Approach to Small Business Debt in 2024

The ATO has been taking a more proactive approach to debt collection, particularly for small businesses. Here are some key points to note: 

ATO’s Corporate Plan: On 27 July 2023, the ATO announced its Corporate Plan for 2023-2024 to 2026-2027. The plan aims to improve small business tax performance, multinational tax performance, and superannuation guarantee integrity.

1. Debt Recovery Strategy: The ATO’s aggressive approach to taxpayer refunds stems from its intensified debt recovery strategy revealed in its Corporate Plan. The ATO is becoming less inclined to entertain payment arrangements, especially where they propose terms of greater than two years.

2. Increased Enforcement Actions: The ATO has increased the workforce in its debt collection department. The number of enforcement actions from the tax office is expected to hit pre-COVID levels in 2023. The ATO has started issuing warning notices to small businesses with tax debts of more than $100,000 and well as a marked increased in Director Penalty Notices (DPNs).

3. Increased Enforcement Actions: The ATO has increased the workforce in its debt collection department. The number of enforcement actions from the tax office is expected to hit pre-COVID levels in 2023. The ATO has started issuing warning notices to small businesses with tax debts of more than $100,000 and well as a marked increased in Director Penalty Notices (DPNs).

4. Engagement with Taxpayers: If taxpayers fail to engage with the ATO to satisfy their outstanding debts, enforcement actions may be escalated. The ATO has the discretion to issue garnishee notices and director penalty notices, report outstanding tax debts to a Credit Reporting Bureau, and commence legal action.

As an expert adviser in ATO debt advice and business debt solutions, I can help you navigate these changes and find the best path forward for your business. If you have any questions or need advice, don’t hesitate to reach out to me at AVA Advisory on 1300 181 220. 

Looking Forward

While 2024 may present some challenges for SMBs, it’s important to remember that every challenge presents an opportunity. As experienced business debt solutions advisers, myself and the team at AVA Advisory can help you navigate these challenges and find the best path forward for your business. If you have any questions or need advice, don’t hesitate to reach out to us at AVA Advisory.

Remember, it’s not about predicting the future, but preparing for it.

If you’re a small or medium business owner and want to prepare for 2024, don’t hesitate to reach out to me directly. The team at AVA Advisory is here to help you navigate the challenges and seize the opportunities that the future holds. Contact us today to schedule an obligation-free consultation.

This blog post is for informational purposes only and should not be taken as legal or financial advice. Always consult directly with a professional business debt advisor or insolvency professional for personalised advice.

Professional advise from a specialist adviser

Remember, every business situation is unique, and the best course of action depends on the specific circumstances of the company and the director.

1 Economic Outlook | Statement on Monetary Policy – August 2023 | RBA
2 Macroeconomic Outlook – Parliament of Australia (aph.gov.au)
3 “Resilience amidst challenges: COSBOA and Square release 2023 Small Business Data Report.” Square, 12 January 2024, https://squareup.com/au/en/press/square-cosboa-2023-in-review. Accessed 20 January 2024.
4 Monthly Household Spending Indicator, November 2023 | Australian Bureau of Statistics (abs.gov.au)
5 Small business experts predict 2024 storylines (smartcompany.com.au)
6 ATO corporate plan 2023–24 | Australian Taxation Office

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