Penalty amnesty tempts 7,000 small businesses back into tax system

UPDATED: This budget measure waives fines for late lodgment of income, BAS and FBT returns due during the pandemic.

An amnesty on failure-to-lodge penalties for small business has tempted more than 7,000 small businesses to file almost 20,000 returns in the first two months of the scheme, the ATO says.

The amnesty, a feature of the May budget, waives fines for income, BAS and FBT returns due between 1 December 2019 and 28 February 2022. To be eligible, a small business must have an annual turnover of less than $10 million at the time the original lodgment was due.

An ATO spokesperson said in the two months since the amnesty began, 7,200 small businesses had filed 19,500 returns and it expected a flood of lodgements before the end-of-December deadline.

“All eligible overdue forms lodged during the amnesty will have any failure-to-lodge penalty applying to the late lodgment remitted,” the spokesperson said.

“We estimate half a million lodgments will be obtained during the amnesty period.”

The ATO said the amnesty was a response to the cumulative impact on small businesses of bushfires, pandemic and other natural disasters, but warned that it was not “a deferral of lodgment obligations”.

“Lodging these forms is not optional and we urge small businesses to take advantage of this unique opportunity as soon as possible. A small business with up-to-date lodgments will have a much better understanding of their financial position, including any amounts they owe to the ATO.

“Small businesses who can pay should ensure this is done on time and in full to prevent the accrual of additional interest charges.”

The ATO declined to estimate how much money was involved but the budget papers said the measure would increase receipts by $718 million over five years.

The ATO is currently owed $30 billion in tax debt, including $1.6 billion in superannuation payments owed to employees.

CPA head of policy and advocacy Elinor Kasapidis said the amnesty appeared to be successful in getting some businesses to re-engage with their tax responsibilities.

“The speed and high take up of the amnesty reflects how tough some businesses have been doing it in recent years,” she said. “This is certainly a good opportunity for businesses to catch up on lodgments that are overdue from the Covid years.

“If lodging results in a tax debt, they may need to discuss payment options with the ATO.”

The CEO of financing company OptiPay, Angus Sedgwick, said it was a great opportunity to “proactively engage with the ATO”.

“Now would be a good time to remind company directors that in some circumstances they can be personally liable for unpaid GST, PAYG and unpaid employee superannuation guarantee payments,” he said. 

However, one bookkeeper who blogged on the initiative, Marianne Davies of Ideal Calculations in Victoria, said none of her recidivist clients had reappeared and most were beyond the point of re-engaging with the ATO.

“They get to a point where they just put their head in the sand,” she said. “I don’t think it’s working – people in that situation unless someone gets onto them, they’re just not interested.”

“They know they owe money!”

By Philip King
11 August 2023
accountantsdaily.com.au