The combination of the GST, widespread corporate collapse and an overall slowdown in the economy has placed considerable strain on the ability for many of us to pay our taxes as and when they fall due. So what do you do if you cannot meet your next tax installment?
Firstly, if you cannot pay your tax on time you should contact the Australian Tax Office (ATO) as soon as possible, preferably before the date the tax is due for payment. If you do not contact the ATO to seek more time to pay, or if you do not pay in accordance with an arrangement to pay over time, the ATO will take swift action to collect the debt plus interest.
When deciding whether to enter into an agreement to accept delayed payment or payment over time, the ATO will look at your particular circumstances. They will look at your financial position and the circumstances that led to your inability to pay on time.
If possible you should send an initial payment with your application as evidence of your genuineness and commitment to pay.
If the payment of your tax will cause you serious hardship, you have the right to apply to the Taxation Relief Board for full or partial release from your tax debt. Serious hardship would be seen to exist where payment of a tax debt would result in you being left without the means to achieve reasonable acquisitions of food, clothing, medical supplies, accommodation, education for children and other basic requirements.
For more information, obtain a copy of the Tax Payers' Charter. This booklet is published by the Australian Tax Office and outlines expected rights, obligations and standards. You can obtain a copy by calling 13 28 61 or visiting the ATO Web site (www.ato.gov.au).
Make sure you consult a financial adviser to discuss how to apply these ideas to your own individual circumstances.
When revising claims the ATO takes into account:
1. Its own guidelines.
2. Your efforts to obtain external funds.
3. Your capacity to pay future liabilities.
4. The manner in which you have previously fulfilled your tax obligations.
Anthony Roberts is a CPA-qualified accountant and co-founder and business development director at Adaptive Technology.