ATO’S big stick for late Returns

Directors of business that lodge their tax returns more than three months late may become personally liable for the debts, under a federal budget change that will hurt small business.

The changes are aimed at stopping so called Phoenix Companies to evade taxes and other debts by the deliberate liquidation of the companies.

The problem is whilst this may curtail some phoenix activity it could have a far more reaching effect on small business in general.   The measure is more about putting a big stick to all companies who lodge BAS, IAS and Income Tax returns late, together with those who do not pay their Superannuation Guarantee liabilities on time.

The Assistant treasurer Bill Shorten is quoted as saying “the changes are designed to allow the Australia Taxation Office to target directors of companies that pose the greatest risk to employee entitlements and tax collection, especially those that have previously engaged in fraudulent phoenix activity”  He went on the confirm that the additional ATO powers “will not be confined to the pursuit of phoenix companies” and may be applied more widely to directors who failed to ensure their companies paid taxes and superannuation on time.

These new measures are supposed to raise an additional $260 million over the next four years.