In the wake of business uncertainty during the COVID-19 pandemic, a vast number of initiatives were put in place to support small and medium enterprise with an expected downturn in sales. Fast forward 3+ years, and most of these measures are being or have been wound back. At the same time, business is facing pressure from a number of angles: decreased consumer and business sentiment, rising interest rates, rising cost of inputs, rising rents and increasing wage costs.
One of the elements put in place to support business was the federal government allowing a temporary ten-fold increase to the minimum amount owed to a creditor before they could make a statutory demand. ($20,000 from $2000.) This ran parallel to an Australian Tax Office with a preparedness to extend and negotiate tax payment plans and renegotiate them in the future. In 2023, the temporary increase is no longer in place and the ATO is far less passive when it comes to negotiation of payment terms for tax debt.
This could be because approx. $30bn of collectable debt is held by small business, some who have taken advantage of the less taxing (pun intended) credit process of the ATO vs a bank or other lender. This is no longer the case, with the ATO doing more due diligence in the form of serviceability assessments, increasing wind up applications and actively looking to reduce this number. The calling of debt by the ATO can come on suddenly, putting unexpected pressure on business cash flow.
Fortunately the debt market has risen to support this, and a number of lenders have shifted their view of ATO debt on the balance sheet to reflect the changing habits of small business. Even if an existing payment plan is being met, there are opportunities to improve cashflow through refinancing this debt from the ATO to a lender.
