Eight per cent of small businesses in default on tax debts
A report by the Inspector-General of Taxation into the debt collection practices of the Australian Taxation Office suggests that a surprisingly large proportion of small businesses is either in default over ageing tax debts, or paying off debts under a payment plan. Small businesses owe the Tax Office $6.9 billion. It is all too easy for any small business that’s too slack, too crooked or too incompetent to use the Tax Office as their banker and supplier, in effect, of working capital. The interest rate charged by the ATO is 12.6 per cent, which is high by the standard of some overdraft and unsecured personal loan rates charged by banks. The statistics show that eight per cent of micro businesses (with turnover of less than $2 million) and also eight per cent of SME businesses are in default to the ATO on their tax debts. The report shows that 51,000 small business taxpayers owed the ATO more than $25,000, and that the average tax debt of businesses in this category was $78,800.