What Happens If You Don’t Pay the ATO On Time?

 

Tax operating organizations in various countries like the Australian Taxation Office in Australia keeps on reminding the taxpayers about their due date. Government authorities understand that tax-paying members like low-income groups and small business units may sometimes have financial issues. Delay in payment happens naturally to these people. Therefore, ATO starts sending SMS long before the payment due date.

Authorities like the Australian Taxation Office can also take stringent action if it realizes the person has no intention to cooperate. ATO charges interest on unpaid amounts.

 General Interest Charge

Australian Taxation Office fixes a general interest charge (GIC) on the amount due on an account. The amount of interest compounds daily, and the accounting team adds the accrued interest with the principal amount plus interest due to the previous day.

The organization reviews the rate of interest under review quarterly. However, a taxpayer may claim remission of penalty like GIC. But he will have to submit the application on the year of charging.

In his application, the applicant needs explaining ATO why he or she thinks deduction in the amount of GIC or its remission seems fair to them. The claimant must narrate the circumstances under which they could not file the return/pay the tax in due time. You may also show proof of action taken in attempting to deliver on the due date.

Upon approval of the request, you must add the GIC paid this year to the account for the next assessment year as an assessable earning.

 Debt Offsetting

Australian Taxation Office does not make any cash refund. Once you qualify for a refund, they will adjust the amount against your accrued dues. Taxation and accounting experts call the process debt offsetting.

Under this process, the authority cancels the credit statement in an account and puts the same into another account where the assessed person has measurable dues. 

Such exchanges may be inter-departmental too. In short, the taxation authority will utilize the approved deduction in mitigating dues in another departmental ledger.

ATO will inform you about their decision to offset your dues in writing. Their decision is binding under such situations.

 Disclosure of Business Debts

If a person is registered with the Australian Taxation Office as a taxpayer and meets specific criteria, he can disclose the entire debt to The Credit Reporting Bureau. On receiving the application, the Bureau examines the applicant’s status and acknowledges the acceptance in a thank note sent by email or registered post.

In the note, the body informs the taxpayer about the things to do next.

Adopting strong measures

ATO usually wants to cooperate with people who don’t want to leave dues unpaid and encourage others to do the same. However, the companies may approve more decisive actions in cases where they find that the person is intentionally bunking the payment. In some cases, a concern approves its liquidation to avoid tax payment, thus protecting the assets. He has plans to come into the market with a new identity and continue the business activities.

 Procedures

Garnishee Notice

A garnishee is a person or agency that holds company funds to use as per need. ATO is well aware of the garnishee bodies with their members.

In the first dues-recovery stage, the tax office may send a notice to them to pay for their client and help reduce their debt.

 Director Penalty Notice

The Aussie Taxation authority may ask the company director to incur penalties. It also works as the initial means to start legal proceedings against the defaulting company. The amount will be equal to:

●        Unpaid PAYG

●        Net GST includes luxury car tax and wine equalization tax.

●        Superannuation guarantee charge.

 Bankruptcy Notice

Notice for insolvency is the injunction of all penalty notice used by a taxation authority. When a company does not respond to the payment notice the Australian Taxation Office serves, the government may ask them to serve the bankruptcy notice.

The defaulting company must pay all the dues within 21 days after receiving such a notice. Alternatively, they can produce a payment plan. The authority appeals to the court if the company does not accept any within this period. The court will order the property acquisition to sell those off and clear the debt.