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How to handle being defaulted by the ATO

Did you know that small businesses in Australia are almost twice as likely to default with the ATO than large businesses? And with over 97% of Aussie businesses classified as SMEs - it’s no wonder business owners are feeling the heat as they try to pay off their tax debt. Here at Nero Financial, we noticed many of our clients were getting into trouble over their tax obligations, and devised a two-step strategy to get them out of hot water.

  1. 1- Refinance - first, we’ll help you secure a Tax Debt loan to pay off your ATO debt in one lump sum; with a manageable repayment schedule you can tackle over time.
  2. 2- Credit repair - then, we will refer you to our credit repair partner who will work with you to clear the default from your credit file, opening the door to better loan options and financial freedom in the future.

As a business owner, navigating an ATO default can be daunting, but with a tailored loan solution and the right strategies in place, you can mitigate the risk and ensure compliance in the future. Before diving into tax planning strategies, it's important to have a clear understanding of your tax obligations. The Australian tax system is complex and your compliance requirements can change at any time, so staying informed about the latest tax laws and regulations is essential to minimise your risk of falling afoul of the ATO.

One of the first steps in tax planning is to assess your business structure – are you a sole trader, in a partnership, running a company or managing a trust? Each has its own tax implications, so make sure you have the right structure in place.

With that out of the way, here are some essential tips to help you avoid being defaulted by the ATO:

Maintain accurate record-keeping: Keep meticulous records of your business transactions, including income, expenses, invoices, and receipts. Accurate record-keeping is crucial for demonstrating compliance and resolving any discrepancies with the ATO.

Maximise your deductions: Want to reduce your taxable income and lower your overall tax liability? Spend more time on maximising your deductions. Deductions that may be relevant for your business are your operating expenses, depreciation, home office expenses, superannuation contributions and even research and development expenses.

Timely lodgment of returns and payments: Submit your tax returns, activity statements, and other required reports to the ATO on time. Late lodgment can attract penalties and interest charges, increasing the risk of default. Set up reminders, use accounting software or bring onboard a bookkeeper to stay organised and meet deadlines.

Seek professional advice: Consult with a qualified tax advisor or accountant to ensure you understand your tax obligations and take advantage of available deductions or concessions. A tax professional can provide valuable guidance tailored to your business's specific needs and circumstances.

Regular compliance checks: Conduct regular reviews of your tax compliance processes to identify any areas of concern or potential risk. Address any issues promptly and implement corrective measures to prevent default.

Stay informed about tax laws and regulations: Stay on top of changes to tax laws, regulations, and reporting requirements that may affect your business. Subscribe to ATO updates, attend seminars or webinars, and leverage online resources to stay informed and compliant.

Maintain open communication with the ATO: Establish a positive relationship with the ATO by maintaining open communication and addressing any queries or concerns promptly. Proactively engage with the ATO to resolve any issues and demonstrate your commitment to compliance.

“The most important thing we want our clients to know when being defaulted by the ATO is that we can help!’ says Julia Paton, Senior Commercial Broker at Nero Financial. “Our team is highly experienced at supporting owners who may be dealing with unexpected tax debt struggles. We are committed to finding the right finance solution to keep you operating at your best, long into the future.”

If you’ve been defaulted by the ATO, are in need of a tax debt loan or simply want a financial boost for your business, our team is here for you. Contact Nero Financial today or call 1300 025 949 and let’s get your business back on track.