Halloween is around the corner, and while ghosts and goblins might spook you, nothing is scarier for a small business owner than facing issues with the Australian Taxation Office (ATO). Late Business Activity Statement (BAS) lodgements, unpaid superannuation, and the complexities of payment plans can all be daunting but we’ve got your back! Read on for our guide to help you navigate these tricky waters.
Late BAS Lodgements
Lodging your Business Activity Statement (BAS) on time is a crucial part of managing your business’s financial obligations to the Australian Tax Office (ATO). Timely lodgement helps you avoid penalties, keeps you in good standing with the ATO, and supports a healthy cash flow for your business. But what happens if suddenly you can’t lodge on time?
ATO Due Dates
The due dates for lodging and paying your BAS depend on your reporting cycle:
- Monthly reporting: Due on the 21st day of the following month.
- Quarterly reporting: Due dates vary per quarter*:
- September quarter: due by 28 October.
- December quarter: due by 28 February.
- March quarter: due by 28 April.
- June quarter: due by 28 July.
*If you are connected to a Tax or BAS agent, the due dates will vary.
Penalties and Causes
Failure to lodge your BAS on time can result in a Failure to Lodge (FTL) penalty. The penalty is calculated using penalty units, which are subject to change. The causes for these penalties can range from carelessness and intentional disregard to hindrance and false or misleading statements.
What to Do If You’re Late
- Contact the ATO Immediately: The sooner you get in touch with the ATO, the better your chances of negotiating a more manageable penalty or even having it remitted in cases of genuine difficulty.
- Seek Professional Advice: A tax advisor or a bookkeeping service like Accounts All Sorted can provide expert guidance on how to navigate the complexities of late lodgements.
- Check for Payment Plans: If you’re unable to pay the penalty upfront, the ATO offers payment plans to help you manage your debt over time.
Safe Harbour from FTL Penalty
The ATO provides a ‘safe harbour’ from FTL penalties for taxpayers who can prove that they took reasonable care to meet their tax obligations but were unsuccessful due to factors beyond their control. To qualify for this, you’ll need to demonstrate that you engaged a registered tax or BAS agent to manage these obligations and that any failure to lodge on time was not your fault.
If you can’t pay your tax debt upfront, the ATO offers payment plans to help you manage your debt. These plans are tailored to your financial situation and can be a lifesaver for businesses facing cash flow issues.
Who Can Enter Into a Payment Plan
If you’re struggling to meet your BAS payment deadlines, the ATO offers the option of payment plans. This is available to both individuals and businesses, including sole traders, who find themselves unable to pay their tax debts on time.
Before Setting Up a Payment Plan
Before diving into a payment plan, it’s crucial to assess your financial situation. Consider how much you can pay now and when you’ll be able to pay in full. The ATO offers an online payment plan estimator to help you calculate a plan you can afford.
Setting Up a Payment Plan
You may be able to set up a payment plan online without needing additional assistance. However, sometimes you may still need to contact the ATO for help, especially if your circumstances are more complex. They may ask for details about your income, expenses, and even your business cash flow for the last three months.
- For Individuals and Sole Traders
If you owe less than $100,000, you can easily set up a payment plan online through the ATO’s services. If you can’t access online services, you can also phone the ATO’s self-help service for individuals.
- For Businesses
Businesses owing less than $100,000 can also set up a payment plan online or by phone. If your business owes more than this amount, you’ll need to call the ATO to discuss your options.
Interest-Free Payment Plans
Small businesses with an annual turnover of less than $2 million may be eligible for interest-free payment plans for overdue activity statement amounts. These plans require the debt to be paid by direct debit within 12 months.
By understanding your options and taking proactive steps, you can navigate the complexities of late BAS lodgement and avoid harsh penalties. If you’re unsure about how to proceed, Accounts All Sorted can guide you through the process, ensuring you make informed decisions.
Unpaid Super: What You Need to Know
Falling behind on superannuation payments for your employees is a situation no business owner wants to find themselves in. Not only does it put you at odds with the ATO, but it can also disrupt your cash flow and tarnish your reputation as an employer.
Late Payment Options
If you’ve made a late super guarantee payment to an employee’s super fund, you have a few options. You can:
- Offset the shortfall and nominal interest components of the Super Guarantee Charge (SGC).
- Use the late payment for super in the current quarter.
- Apply the late payment towards future super payments, but this is limited to a period of no more than 12 months from the start of the quarter.
Super Guarantee Penalties
The ATO imposes various penalties for late or missed super guarantee payments:
- Superannuation Guarantee Charge (SGC): A non-tax-deductible charge that includes the SG shortfall amounts, an interest charge, and an administration fee.
- Administrative Penalty: If you pay less of the SGC than you should because of a false or misleading statement, you may receive an administrative penalty. The base penalty amount can be up to 75% of the shortfall.
- Director Penalties: Directors are personally liable for unpaid super guarantee charges. If these remain unpaid, a director penalty equal to the unpaid amount may be imposed.
- General Interest Charge (GIC): This applies if you do not pay the super guarantee charge by the due date. The GIC will continue to increase from the date your SGC is due up to the date you pay your SGC amount in full.
What to Do If You’re Late or Have Difficulty Paying Super
If you find yourself unable to meet the super guarantee payment deadline, it’s crucial to act quickly to minimise penalties.
- Lodge an SGC statement as soon as possible to avoid additional penalties.
- If you can’t pay the SGC in full, you can set up a flexible payment plan.
If you’re having difficulty meeting your super guarantee obligations, you should make a voluntary disclosure by completing and lodging an SGC statement by its due date, even if you can’t pay it in full. This will minimise the nominal interest that accrues after the due date.
How to Prevent Late Payments
To avoid falling behind on super payments, consider implementing a regular payment system that’s compliant with Single Touch Payroll (STP), like Xero. With Xero or your preferred accounting software, you can automate super payments, ensuring you never miss a deadline. For more information on how Accounts All Sorted can assist you with Xero, click here.
Don’t Let the ATO Spook You!
Navigating late BAS lodgements or unpaid super? It’s manageable with the right support. Accounts All Sorted is here to guide you through these financial mazes, keeping you ATO-compliant and stress-free. Talk to us today and we will be more than happy to help!Talk To Us Today