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ATO Debt Recovery and Director Penalty Notices

The ATO has increased its activity around recovering unpaid business debts. During the pandemic, it paused debt recovery, but has now resumed its pursuit of debts.

Since April 2022, the ATO has sent tens of thousands of letters to directors notifying them about impending action. Director penalty notices (DPNs) have been issued to directors who have not replied to the ATO letters and have not otherwise engaged with the ATO about their debts.

DPN law means that if a company did not pay ATO obligations on time, company directors could become personally liable for the amount owing, in addition to penalties.

DPNs can be issued for unpaid PAYG withholding, superannuation guarantee, GST, WET and LCT.

If you received a letter about ATO debt recovery, talk to us so we can look at the available options with you.

Talk to Us About Your Business Liabilities

• Are you clear about what you owe the ATO?
• Are you aware of the extent and financial implications of your personal liability?
• Have you given director guarantees to any suppliers that might increase your individual liability?
• Are your ASIC details correct? If a notice is issued to an incorrect address listed on ASIC, legal recovery will go ahead whether the director receives the notice or not, if contact is not made within 21 days of the letter’s date.

If you are considering taking on a new position for an existing company, check the status of the financial obligations of that company before accepting the position, as new directors may become liable for existing debts. Equally, if you resigned from the position of directorship don’t ignore it as the notice may relate to the time you were a director.

Contact us to learn more about managing business finances so you can continue running the business you love.

When to Register Your Business for GST

Should you register your business for GST? Many business owners register their businesses from day one, regardless of income. Others, for example, many sole traders, choose not to register for GST until it is mandatory.

However, it is common that new businesses don’t realise they have exceeded the income threshold at which they must register! This can result in having to pay GST on sales to the ATO even if you haven’t included it in your prices – so you could lose one-eleventh of your income.

When is GST Registration Compulsory?

Your business must register for GST when it makes $75,000 income within a financial year. If you’re regularly making $6,250 or more each month, it’s time to check whether you should register for GST.

It’s good practice to check your turnover every quarter, and when you are getting close to the threshold, check every month. If you’re not yet using online accounting software, talk to us about your options, as this will make reporting and preparing for GST registration much easier.

You must register for GST within 21 days of reaching the threshold.

Special Rules

• You can voluntarily register even if your turnover is less than $75,000. This means you can complete an annual BAS if you prefer.
• If you’re making money through a ride-sharing platform like Uber, you must register for GST immediately. All commercial driving income, regardless of turnover, is subject to GST registration.
• If you want to claim fuel tax credits, you must register.
• If your business is a not for profit, the registration threshold is $150,000 per financial year.
• If you’re not an Australian resident business, the rules for working out GST turnover are different, so talk to us before registering.

Need Help?

When starting a new business, there are many decisions to make, and GST registration is just one of them. Get in contact about the benefits of registering, and we’ll help you get set up on appropriate accounting software to help you on your way to business success.

Leveraging the “SME Advantage”

It’s challenging times for employers, with record-high levels of employee turnover, shortages of skilled staff in a tight labour market, low unemployment, and wages rising to keep pace with surging inflation.

Small and medium-sized enterprises (SMEs) may find it harder to compete with the deep pockets of large corporations, but there are plenty of advantages SMEs have in being able to attract and retain talent by tailoring creative, meaningful remuneration packages for each employee.

Here are some key tips:

• Look beyond the pay packet – while you want to keep salaries in line with market rates, if possible, there are many other things that are just as, or more important, to people. Can you offer a better work-life balance, career progression, or a vibrant, inclusive workplace culture?
• Personalise your offerings – everyone is different, so the benefits and support you offer should be valuable to each employee, whether that’s extra training opportunities, more leave, equity via a profit-sharing scheme, or perks like gym memberships.
• Support and trust your staff – establish a solid basis for each employment relationship and match expectations with action. This builds trust and confidence, which flows into higher motivation and employee retention.
• Flexibility is key – research shows that flexible work arrangements are now expected by many employees, so explore options with your people. Can people work remotely some of the time or work flexible hours so they can meet family commitments or miss rush hours?
• Build your mission and culture – small businesses are often run by passionate people, so provide clarity and purpose for employees by articulating your vision and building a dynamic team culture that supports people and celebrates success.

For more detail about the ways SMEs can leverage their advantages to attract and keep talented employees, have a look at this article.