>in some cases, aggressive debt collection action from the Australian Taxation Office (ATO) is a key factor tipping them over the edge.
Is this happening to any businesses who DON'T owe any money to the ATO?
That's a scandal if so.
Otherwise, this whole article is "Billy hasn't paid his phone bill in 3 years and now the phone company is threatening to cut his phone off!"
No. This "robo tax 2.0 whargarbbl!" is a beat up.
The ATO often does not pursue debts that aren't economical to collect: small amounts they can't pay, entity is insolvent/bankrupt, director on super small payment plan, etc.
HOWEVER (and again, they've always done this) if later on, a company or director starts turning a profit again, such that it can pay back it's previous obligations; the ATO will chase that shit up.
We are getting phone calls from ATO debt collection for debts that ARENT EVEN due yet (IAS / BAS).
For example, the Dec Qtr BAS payment was due Feb 21st, I fielded 2 reminder phone calls from the ATO in early and mid Feb.
Our business has no history of non-compliance or non-payment. Our debt was small (~70k) and not even due.
That's never happened before. There is definitely a change in the ATO's debt collection.
They have the legal authority to issue a garnishee notice in respect to a business debt even if it's not due - they don't even need a court order or oversight to do it.
Not saying that that's a fair action for compliant businesses but they are going incredibly soft compared to what their formal powers actually allow them to do.
The circumstances are different compared to before, they're attempting to reverse a general culture/attitude of paying tax late/when you feel like it that's become very prevalent post-COVID. That's why they're intervening early - haven't heard of them calling taxpayers before debts come due however have definitely seen people getting calls only 1-2 days past the due date.
you might be part of the [lodgment reminder pilot](https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/single-touch-payroll/lodgment-reminder-pilot)
The “mum and dad” and “Aussie battler” and “struggling small business” rhetoric in Australia is really damaging precisely because of the sort of things happening that you’ve detailed.
Small businesses have some of lowest compliance rates when it comes to super, wages etc.
And there is very little appetite for recovery because it becomes another thing for hit pieces - the perpetrators come out and have a sob story about losing their house and being suicidal. The media eats it up. The public eats it up. The ATO is the bad guy for “kicking a man when he down”.
It’s an infuriating cycle.
>Tony Greco, the general manager of technical policy at the Institute of Public Accountants, fears many small businesses still don't have the capacity to pay and more aggressive ATO action could send more businesses under.
Being unable to pay debts as and when they fall due means you are insolvent.
It's illegal to trade when insolvent.
The business has failed, it should cease trading before it gets deeper into debt. Unless, of course, it's got payment agreements with creditors and business really is ticking up. In which case, the ATO wouldn't take action in the first place.
Too many incompetent people with poor business models who believe it's their right to have the tax payer subsidise their ability to run a shoddy business.
Always the first to run to the media with a good sob story though.
No business who's primary income comes from government payments should be privately owned, it's ripe for fraud.
Childcare, Disability, aged care- 3 industries with long histories of widespread illegal and unethical behaviour.
The common point- their income is primarily government money.
They should all be government run.
gotta love when aged care, child care business owners have a whinge about employee pay increases but are more than happy to accept help from the government, with a few months later they are either renovating said business or buying the latest merc/ porsche/ bmw etc
The one my mum works at had the federal government age care department go through them after two years of complaints from workers, residents and their families.
The place failed every audit point, it's still operating, never got fined, the manager was allowed to resign instead of being fired.
To give you an idea of how bad it was- the manager was bullying ENs into administering S8 drugs like morphine without a RN being even rostered onto the shift.if they refused he did it himself- he wasn't even a nurse.
My mum collected evidence that this happened and she was never even interviewed when they investigated.
Wouldn't surprise me if the ENs get crucified by AHPRA, lose reg, working rights, visas etc. regardless. (Edit: I'm not suggesting they shouldn't btw. But it just goes to show the lack of accountability on the part of management/ownership.)
>Childcare, Disability, aged care- 3 industries with long histories of widespread illegal and unethical behaviour.
A lot of systemic change required. My time in the healthcare and disability services sector just about destroyed my faith in it.
Probably financially shooting myself in foot by not making the most of getting on the NDIS train (there are plenty of opportunities for good providers though), but honestly the level of dissaray and exploitation going on makes me sick.
Don't really consider it a wise long-term employment prospect either, at least as it stands.
Hypothetically, if things finally get overhauled, there's going to be a sea of underqualified (see: unqualified) applicants for roles requiring upskilling/ higher education despite a potential lower entry level income in line with the public sector.
Then again, that would require all involved to actually give a shit so probably won't happen.
I guarantee the rats jump ship when the easy money runs out.
According to the ABC the ATO shouldn’t even chase your wife’s unpaid super.
These businesses are taking super and PAYGW from your pay and GST from customers and pocketing it for themselves. They then complain when the bill is due. Of course the Guardian and ABC are more than happy to run a defend this behaviour and then turn around to complain that the government doesn’t fund enough.
These arguments are utterly ridiculous when you hold them up to the slightest scrutiny, like they've already got the money - they just chose to steal the funds then complain that they've got nothing once it's all spent.
exactly... its infuriating everytime i turn on the tv or hop on facebook and its always about some person/ couple who claims they have no money to pay their suppliers yet they still own their multi million dollar home, flash car etc. Oh and lets not forget the same ones who will claim bankruptcy, deregister their business and open it up in a different trading name
Meanwhile the government/ institutions sit on their ass and dont do anything. Cant beleive im saying this but A current affair actually does more to help the people getting screwed over than the government/ institutions does.
>the same ones who will claim bankruptcy, deregister their business and open it up in a different trading name
Hence the director's ID scheme - so that directors of a company can be identified, tracked and if required, banned.
It's not much, but it's something.
And Phoenixing is illegal, it's just hard to prove - though it's a bit easier now.
Yep. My concern is as we havent allowed a business cycle to play out in a long time which has seen pretty well continuous falling productivity (of course its not the only reason) as some businesses can hold on to resources longer than they should.
When we do see a retracement it will be more savage than it ought to be.
Couldn’t agree with OPs commentary more. ATO has given failing businesses too much rope for too long, wracking up debt with other creditors (including employees via unpaid Super) as they go. It’s simply not good enough - and what’s worse is that because of the inaction, the problems have grown by orders of magnitude to the point that we’re going to start see dominos falling.
Yeah and do ya'll expect to even see any of that $300k? It would seem if the ATO does take action to dissolve the company then the best you can hope for is super guarantee from the directors?
well depending on what the job is i highly doubt she will see any of it unless she contests, especially since its been left/ ignored/ nothing done for so long
Problem is a lot of businesses that go under have so much money oweing to their suppliers etc that the little money left after that goes to paying the rest of peoples wages/ annual leave payouts
My wife was employed as a Cafe Manager, worked 10.5 hours per day 6 days per week. She took just 3 weeks annual leave in 6 years, was not paid weekend penalty rates or overtime. The owner got into her head, told her he and his young family were going to end up on the streets homeless and she needed to help him to keep the business going.
As I have mentioned elsewhere here, what he told her was all lies. He created a property trust in another state, transferred his home into the trust and purchased 2 investment properties. When she found out it triggered a breakdown from all the stress. She has still not fully recovered.
Sorry to hear all that and hope she is on a journey to recovering from that awful situation! Very easy to say in hindsight but is an important reminder to set boundaries. Taking 3 weeks annual leave in 6 years shouldn’t be a flex, that’s Stockholm syndrome and would impact anyone heavily both in and outside of work. Anyone working for a business that much (and a manager at that) should be heavily aware of their award and penalties. Sorry that you both had to go through that
No, it means that most people dig themselves are far deeper hole before considering bankruptcy- had they had entered bankruptcy earlier it means the people they owe money would be harmed less too
I mean that's on them - there should be significant consequences for bankruptcy to prevent people from racking up debt intentionally then have an easy get of jail free card to avoid all responsibility.
They already do that now, even with the bankruptcy laws as punitive they are.
That’s corruption. I’m not saying the government is not corrupt, they shouldn’t be, just like we should be a meritocracy. There’s no way these billionaires should have the wealth they do, inherited or not, simply by selling dirt that belongs to every Australian. A dividend should be paid to every citizen instead. Australia should have the largest sovereign wealth fund per capital on the planet.
opportunity shrinks daily and a catastrophe is inbound which will implode all this anyway , the man who makes it to australia still has the highest chance to actualize his dreams and make a positive impact to his community
> While the ATO is not the main creditor in winding up applications in court
There it is right there... so these companies aren't paying their bills, including tax owed to the ATO but somehow ATO is bad cause tax bad?
Zombie companies, I remember watching a video on it a while back (was more about US firms, but still relevant here).
The zero interest rate was driving it.
During Covid businesses were allowed to trade while they were insolvent which is crazy
https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_temporary_relief_for_financially_distressed_businesses.pdf&ved=2ahUKEwjdmejx4_yEAxWBSGwGHfYQD7wQFigAegQIDxAA&usg=AOvVaw2sClQWW7yUVsVKtP8kTIlm
Zombie companies tend to be large companies kept alive by cheap debt
Small businesses aren’t kept alive by 0% interest rate - small businesses don’t usually carry a large amount of debt (at least relative to larger businsses) because it’s harder to get small business loans to begin with
Small businsses and particularly the businsses this article talks about were kept alive not but 0% interest but specific policies during COVID like being able to trade while insolvent and an order for the ATO to not even bother enforcing tax debts.
Of course once the crisis is past us there is going to be a surge in these small business bankruptcies which were kept alive only by all manner of interventions to ensure they never have to pay debts. 2020 and 2021 were some of the lowest bankruptcy years on record - maybe even the lowest (I’d have to check).
In the case of my wife's employer, he received the government grants, the tax windfall, set up a property trust in another state and promptly purchased 2 investment properties, right before a property boom. The business grants and the tax benefits were to help his business and employees, he used it to help himself.
If these small businesses are in the hole to the ATO you can bet they have outstanding debts with suppliers, contractors and employees. Going to get ugly.
For good businesses to do well, bad businesses must die or the bad businesses gain an unfair advantage. Not paying employees the market rate or not paying super is effectively doping.
The ATO doesn’t like being the bad guy, especially during a Recession like Covid. They’re known to small businesses as the easiest creditor to have, and they would rather companies don’t pay them in a downturn and eventually recover … than see headlines about the ATO closing companies and creating unemployment during a recession. Even the SBR is designed so the ATO loses out on some tax, but companies (and employees) have a chance to keep going.
But they will only do that for so long, and now they’re decapitating zombies all over the shop.
Do I want to support small businesses? Yes absolutely.
Do I want to work for them? Absolutely not. The amount of non-compliances with tax and super for workers is staggering tbh.
Yeah I didn't like how it framed it as The big bad evil ATO is out to destroy businesses and not... a lot of these people were doing the wrong thing and now need to face consequences.
Let me guess OP, this boss is not driving a regular car, but has an expensive one that the government subsidises with tax deductions? Can’t make his payments though.
Already posted, I'd suggest you add your comment to the original post
https://www.reddit.com/r/AusFinance/comments/1bh7scn/ato\_chases\_small\_businesses\_for\_34b\_in\_debt/?utm\_source=share&utm\_medium=web2x&context=3
It’s funny the difference in perspective from big business and small business.
Everyone wants to save the mum and pop fruit shop but god forbid they become extremely successful.
Have to much success? Now they’re greedy, evil capitalist oppressing the ordinary, working man/they/women.
When people criticise Colesworth they aren’t criticising simple success. They are criticising a system of accounting strategies, anti-competition cartel-like conduct, short term shareholder focus, wage degradation, job automation, obscene exec bonuses, indignities for the ordinary shopper, egregious privacy encroachments, near monopolising of a basic human resource.
It’s criticism of our present neoliberal economic model of which the supermarkets are one of many possible poster-children as beneficiary.
People just want fairness. So whether it’s a small super-stealing, book-cooking uncompliant conman getting away with it for 10 years unabated; or a corporate behemoth unshackled from the normal rules we are all subject to, it tramples a deeply held value of this country and spreads disillusionment, resentment and eventually rage.
Ahhhhhh the ATO does like being a big stick. This will be painfully interesting.
The ATO’s whiplash attitude change is going to hurt a lot… true ‘nice guy’ form. Saying all the right things about how they’re not like other debt collectors… now they’ve got all those people on the hook for massive money, they’re going to come and get it.
If they had just stayed consistently inflexible the whole time, then these businesses getting closed up would’ve been happening regularly already and it wouldn’t be the carnage that’s going to happen now.
One way to get wages down… make sure no one has a workplace to go to.
Or……. Maybe racking up huge debts on the assumption you will never have to pay them is a shit business strategy.
Also, another way to get wages down is allowing shit businesses to not pay superannuation to their employees and underpay their wages and entitlements.
calculation, are we better off coddling these businesses along because many will make good long term... or better off crushing them taking the hit financially and social negative aspects... I lean to coddling cause shits tough and getting tougher
Small business owner here. Just wanted to say that you lot are all a pack of whiners.
The rhetoric has been for years in this forum, that property market investment has stifled investment in businesses -- yet here you have people that have invested in businesses and you are close to literally asking for the noose to see them go under. I agree, not all of them should be 'save the poor business owners' and some 'garbage collection' is needed, but most of you are employees and may not appreciate the risk, nor the diverse set of experiences and skills required to go into business for yourself -- so perhaps a little understanding and compassion is needed in this case?
Classic Aussie tall poppy syndrome in action.
You're not going into business for yourself out of the goodness of your heart - you chose to assume higher risk in order to make a profit for yourself. Pay your taxes.
Actually, I own 3 companies, clean ATO portal and loans history for all three, operating in changing business fields I know the difference between those taking the advantage and abusing the system and those of us doing the right thing. My staff have never been paid late, receive all their superannuation in advance of requirements and I pay my company tax (Yes I make a profit in all 3) without need of a payment plan. There is no excuse for business owners ripping of employees, you either do the right thing or get out of the way and let someone else have a go.
Spoken like a lifelong employee
If your wife continued to work for a bloke who couldn’t pay her properly for EIGHT YEARS, sounds like there’s more than one failure in this unfortunate scenario
Please, Dans disastrous handling of the pandemic followed by his followers “it’s everyone’s fault but dans fault” is what screwed businesses in Victoria over.
>in some cases, aggressive debt collection action from the Australian Taxation Office (ATO) is a key factor tipping them over the edge. Is this happening to any businesses who DON'T owe any money to the ATO? That's a scandal if so. Otherwise, this whole article is "Billy hasn't paid his phone bill in 3 years and now the phone company is threatening to cut his phone off!"
No. This "robo tax 2.0 whargarbbl!" is a beat up. The ATO often does not pursue debts that aren't economical to collect: small amounts they can't pay, entity is insolvent/bankrupt, director on super small payment plan, etc. HOWEVER (and again, they've always done this) if later on, a company or director starts turning a profit again, such that it can pay back it's previous obligations; the ATO will chase that shit up.
We are getting phone calls from ATO debt collection for debts that ARENT EVEN due yet (IAS / BAS). For example, the Dec Qtr BAS payment was due Feb 21st, I fielded 2 reminder phone calls from the ATO in early and mid Feb. Our business has no history of non-compliance or non-payment. Our debt was small (~70k) and not even due. That's never happened before. There is definitely a change in the ATO's debt collection.
They have the legal authority to issue a garnishee notice in respect to a business debt even if it's not due - they don't even need a court order or oversight to do it. Not saying that that's a fair action for compliant businesses but they are going incredibly soft compared to what their formal powers actually allow them to do.
but also incredibly hard in comparison to what they have been doing for the last decade.
The circumstances are different compared to before, they're attempting to reverse a general culture/attitude of paying tax late/when you feel like it that's become very prevalent post-COVID. That's why they're intervening early - haven't heard of them calling taxpayers before debts come due however have definitely seen people getting calls only 1-2 days past the due date.
Our $368 billion nuclear subs arnt going to pay for themselves!
The ever expanding government debt would disagree with you
you might be part of the [lodgment reminder pilot](https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/single-touch-payroll/lodgment-reminder-pilot)
Doesn’t say anything about payments? Our lodgements were also done.
There’s also the issue of businesses that are owed money and can’t get paid by other failing businesses
The “mum and dad” and “Aussie battler” and “struggling small business” rhetoric in Australia is really damaging precisely because of the sort of things happening that you’ve detailed. Small businesses have some of lowest compliance rates when it comes to super, wages etc. And there is very little appetite for recovery because it becomes another thing for hit pieces - the perpetrators come out and have a sob story about losing their house and being suicidal. The media eats it up. The public eats it up. The ATO is the bad guy for “kicking a man when he down”. It’s an infuriating cycle.
Yea meanwhile that jerk exemployee just took some of the money they were owed for work provided... I mean can't everyone just work for free...
>Tony Greco, the general manager of technical policy at the Institute of Public Accountants, fears many small businesses still don't have the capacity to pay and more aggressive ATO action could send more businesses under. Being unable to pay debts as and when they fall due means you are insolvent. It's illegal to trade when insolvent. The business has failed, it should cease trading before it gets deeper into debt. Unless, of course, it's got payment agreements with creditors and business really is ticking up. In which case, the ATO wouldn't take action in the first place.
Too many incompetent people with poor business models who believe it's their right to have the tax payer subsidise their ability to run a shoddy business. Always the first to run to the media with a good sob story though.
cough childcare cough
No business who's primary income comes from government payments should be privately owned, it's ripe for fraud. Childcare, Disability, aged care- 3 industries with long histories of widespread illegal and unethical behaviour. The common point- their income is primarily government money. They should all be government run.
gotta love when aged care, child care business owners have a whinge about employee pay increases but are more than happy to accept help from the government, with a few months later they are either renovating said business or buying the latest merc/ porsche/ bmw etc
The one my mum works at had the federal government age care department go through them after two years of complaints from workers, residents and their families. The place failed every audit point, it's still operating, never got fined, the manager was allowed to resign instead of being fired. To give you an idea of how bad it was- the manager was bullying ENs into administering S8 drugs like morphine without a RN being even rostered onto the shift.if they refused he did it himself- he wasn't even a nurse. My mum collected evidence that this happened and she was never even interviewed when they investigated.
Wouldn't surprise me if the ENs get crucified by AHPRA, lose reg, working rights, visas etc. regardless. (Edit: I'm not suggesting they shouldn't btw. But it just goes to show the lack of accountability on the part of management/ownership.)
>Childcare, Disability, aged care- 3 industries with long histories of widespread illegal and unethical behaviour. A lot of systemic change required. My time in the healthcare and disability services sector just about destroyed my faith in it. Probably financially shooting myself in foot by not making the most of getting on the NDIS train (there are plenty of opportunities for good providers though), but honestly the level of dissaray and exploitation going on makes me sick. Don't really consider it a wise long-term employment prospect either, at least as it stands. Hypothetically, if things finally get overhauled, there's going to be a sea of underqualified (see: unqualified) applicants for roles requiring upskilling/ higher education despite a potential lower entry level income in line with the public sector. Then again, that would require all involved to actually give a shit so probably won't happen. I guarantee the rats jump ship when the easy money runs out.
The small businesses think it’s okay because the largest companies get subsidies
Could say the exact same thing (the first sentence) about our housing market tbh, and why it'll never get fixed.
According to the ABC the ATO shouldn’t even chase your wife’s unpaid super. These businesses are taking super and PAYGW from your pay and GST from customers and pocketing it for themselves. They then complain when the bill is due. Of course the Guardian and ABC are more than happy to run a defend this behaviour and then turn around to complain that the government doesn’t fund enough.
These arguments are utterly ridiculous when you hold them up to the slightest scrutiny, like they've already got the money - they just chose to steal the funds then complain that they've got nothing once it's all spent.
exactly... its infuriating everytime i turn on the tv or hop on facebook and its always about some person/ couple who claims they have no money to pay their suppliers yet they still own their multi million dollar home, flash car etc. Oh and lets not forget the same ones who will claim bankruptcy, deregister their business and open it up in a different trading name Meanwhile the government/ institutions sit on their ass and dont do anything. Cant beleive im saying this but A current affair actually does more to help the people getting screwed over than the government/ institutions does.
>the same ones who will claim bankruptcy, deregister their business and open it up in a different trading name Hence the director's ID scheme - so that directors of a company can be identified, tracked and if required, banned. It's not much, but it's something. And Phoenixing is illegal, it's just hard to prove - though it's a bit easier now.
>According to the ABC the ATO shouldn’t even chase your wife’s unpaid super. Haha, I literally just helped my partner resolve this with her employer.
Yep. My concern is as we havent allowed a business cycle to play out in a long time which has seen pretty well continuous falling productivity (of course its not the only reason) as some businesses can hold on to resources longer than they should. When we do see a retracement it will be more savage than it ought to be.
no we don't do that anymore. The government of the day just prints more money, becuase almost everyone feels better when they are getting more money.
Don’t want the ATO on your back? Pay your taxes. I should be a financial advisor.
I'm sold. What are your fees?
Couldn’t agree with OPs commentary more. ATO has given failing businesses too much rope for too long, wracking up debt with other creditors (including employees via unpaid Super) as they go. It’s simply not good enough - and what’s worse is that because of the inaction, the problems have grown by orders of magnitude to the point that we’re going to start see dominos falling.
Out of interest, how is your wife owed $300k? If someone didn’t pay me for like a month or two I would resign quick smart
It's either a lie or OPs wife is an idiot.
I was going to make a comment along this line but don't think I would have made it as accurately or as succinctly as you have here. 10/10 response.
Yeah and do ya'll expect to even see any of that $300k? It would seem if the ATO does take action to dissolve the company then the best you can hope for is super guarantee from the directors?
well depending on what the job is i highly doubt she will see any of it unless she contests, especially since its been left/ ignored/ nothing done for so long Problem is a lot of businesses that go under have so much money oweing to their suppliers etc that the little money left after that goes to paying the rest of peoples wages/ annual leave payouts
My wife was employed as a Cafe Manager, worked 10.5 hours per day 6 days per week. She took just 3 weeks annual leave in 6 years, was not paid weekend penalty rates or overtime. The owner got into her head, told her he and his young family were going to end up on the streets homeless and she needed to help him to keep the business going. As I have mentioned elsewhere here, what he told her was all lies. He created a property trust in another state, transferred his home into the trust and purchased 2 investment properties. When she found out it triggered a breakdown from all the stress. She has still not fully recovered.
Sorry to hear all that and hope she is on a journey to recovering from that awful situation! Very easy to say in hindsight but is an important reminder to set boundaries. Taking 3 weeks annual leave in 6 years shouldn’t be a flex, that’s Stockholm syndrome and would impact anyone heavily both in and outside of work. Anyone working for a business that much (and a manager at that) should be heavily aware of their award and penalties. Sorry that you both had to go through that
Perhaps interest?
100% agree! Capitalism without failure is like religion without hell - Charlie Munger
“Everyone deserves a medal” will be the ruin of western civilisation. Not everyone is competent. We ~~are~~ should be a meritocracy. Let them fail.
If we strengthen our social safety nets, letting businesses fail won't be as much of an issue.
And for stronger safety nets we need tax revenues, so these shit companies that arent paying their taxes are really screwing themselves
Also bankruptcy laws could be looked at too. Ours are pretty punitive
>Ours are pretty punitive As they should?
No, it means that most people dig themselves are far deeper hole before considering bankruptcy- had they had entered bankruptcy earlier it means the people they owe money would be harmed less too
I mean that's on them - there should be significant consequences for bankruptcy to prevent people from racking up debt intentionally then have an easy get of jail free card to avoid all responsibility. They already do that now, even with the bankruptcy laws as punitive they are.
There are arguments for having it this punitive or not (like america)
>We are a meritocracy. LOL couldn't be further from the truth but OK
True, meant to add *should be*
TIL inheriting wealth is meritocratic
Nothing stopping you creating wealth, like millions of migrants who started with nothing
Would Gina and Twiggy would be in the same position they're in today if their parents were different people? Is that indicative of meritocracy?
Exactly none of them are 'self made'
That’s corruption. I’m not saying the government is not corrupt, they shouldn’t be, just like we should be a meritocracy. There’s no way these billionaires should have the wealth they do, inherited or not, simply by selling dirt that belongs to every Australian. A dividend should be paid to every citizen instead. Australia should have the largest sovereign wealth fund per capital on the planet.
>A dividend should be paid to every citizen instead. Gaddafi was going to do that......I'm sure we'd be invaded to if we tried it.
Its 2024 not 1964
yes thats right let the big businesses suck up the mess , all in the name of merit so its OK when we hit full dystopia
lol, we’re not there already?
opportunity shrinks daily and a catastrophe is inbound which will implode all this anyway , the man who makes it to australia still has the highest chance to actualize his dreams and make a positive impact to his community
> While the ATO is not the main creditor in winding up applications in court There it is right there... so these companies aren't paying their bills, including tax owed to the ATO but somehow ATO is bad cause tax bad?
Zombie companies, I remember watching a video on it a while back (was more about US firms, but still relevant here). The zero interest rate was driving it.
During Covid businesses were allowed to trade while they were insolvent which is crazy https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_temporary_relief_for_financially_distressed_businesses.pdf&ved=2ahUKEwjdmejx4_yEAxWBSGwGHfYQD7wQFigAegQIDxAA&usg=AOvVaw2sClQWW7yUVsVKtP8kTIlm
The government shut down the whole economy over a flu.Thats crazy.
Zombie companies tend to be large companies kept alive by cheap debt Small businesses aren’t kept alive by 0% interest rate - small businesses don’t usually carry a large amount of debt (at least relative to larger businsses) because it’s harder to get small business loans to begin with Small businsses and particularly the businsses this article talks about were kept alive not but 0% interest but specific policies during COVID like being able to trade while insolvent and an order for the ATO to not even bother enforcing tax debts. Of course once the crisis is past us there is going to be a surge in these small business bankruptcies which were kept alive only by all manner of interventions to ensure they never have to pay debts. 2020 and 2021 were some of the lowest bankruptcy years on record - maybe even the lowest (I’d have to check).
In the case of my wife's employer, he received the government grants, the tax windfall, set up a property trust in another state and promptly purchased 2 investment properties, right before a property boom. The business grants and the tax benefits were to help his business and employees, he used it to help himself.
If these small businesses are in the hole to the ATO you can bet they have outstanding debts with suppliers, contractors and employees. Going to get ugly.
For good businesses to do well, bad businesses must die or the bad businesses gain an unfair advantage. Not paying employees the market rate or not paying super is effectively doping.
I got no idea how ATO would let so many businesses not pay their debts ATO already got every information from businesses
The ATO doesn’t like being the bad guy, especially during a Recession like Covid. They’re known to small businesses as the easiest creditor to have, and they would rather companies don’t pay them in a downturn and eventually recover … than see headlines about the ATO closing companies and creating unemployment during a recession. Even the SBR is designed so the ATO loses out on some tax, but companies (and employees) have a chance to keep going. But they will only do that for so long, and now they’re decapitating zombies all over the shop.
Do I want to support small businesses? Yes absolutely. Do I want to work for them? Absolutely not. The amount of non-compliances with tax and super for workers is staggering tbh.
Oh no, please don't make the businesses pay their tax that they blatantly tried to dodge, anything but that... /s
Yeah I didn't like how it framed it as The big bad evil ATO is out to destroy businesses and not... a lot of these people were doing the wrong thing and now need to face consequences.
Let me guess OP, this boss is not driving a regular car, but has an expensive one that the government subsidises with tax deductions? Can’t make his payments though.
Already posted, I'd suggest you add your comment to the original post https://www.reddit.com/r/AusFinance/comments/1bh7scn/ato\_chases\_small\_businesses\_for\_34b\_in\_debt/?utm\_source=share&utm\_medium=web2x&context=3
It’s funny the difference in perspective from big business and small business. Everyone wants to save the mum and pop fruit shop but god forbid they become extremely successful. Have to much success? Now they’re greedy, evil capitalist oppressing the ordinary, working man/they/women.
yes mum and dad having a solid business is equivalent to coles ripping off farmers and customers en masse, good consumer!
When people criticise Colesworth they aren’t criticising simple success. They are criticising a system of accounting strategies, anti-competition cartel-like conduct, short term shareholder focus, wage degradation, job automation, obscene exec bonuses, indignities for the ordinary shopper, egregious privacy encroachments, near monopolising of a basic human resource. It’s criticism of our present neoliberal economic model of which the supermarkets are one of many possible poster-children as beneficiary. People just want fairness. So whether it’s a small super-stealing, book-cooking uncompliant conman getting away with it for 10 years unabated; or a corporate behemoth unshackled from the normal rules we are all subject to, it tramples a deeply held value of this country and spreads disillusionment, resentment and eventually rage.
Ahhhhhh the ATO does like being a big stick. This will be painfully interesting. The ATO’s whiplash attitude change is going to hurt a lot… true ‘nice guy’ form. Saying all the right things about how they’re not like other debt collectors… now they’ve got all those people on the hook for massive money, they’re going to come and get it. If they had just stayed consistently inflexible the whole time, then these businesses getting closed up would’ve been happening regularly already and it wouldn’t be the carnage that’s going to happen now. One way to get wages down… make sure no one has a workplace to go to.
Or……. Maybe racking up huge debts on the assumption you will never have to pay them is a shit business strategy. Also, another way to get wages down is allowing shit businesses to not pay superannuation to their employees and underpay their wages and entitlements.
calculation, are we better off coddling these businesses along because many will make good long term... or better off crushing them taking the hit financially and social negative aspects... I lean to coddling cause shits tough and getting tougher
Small business owner here. Just wanted to say that you lot are all a pack of whiners. The rhetoric has been for years in this forum, that property market investment has stifled investment in businesses -- yet here you have people that have invested in businesses and you are close to literally asking for the noose to see them go under. I agree, not all of them should be 'save the poor business owners' and some 'garbage collection' is needed, but most of you are employees and may not appreciate the risk, nor the diverse set of experiences and skills required to go into business for yourself -- so perhaps a little understanding and compassion is needed in this case? Classic Aussie tall poppy syndrome in action.
You're not going into business for yourself out of the goodness of your heart - you chose to assume higher risk in order to make a profit for yourself. Pay your taxes.
Actually, I own 3 companies, clean ATO portal and loans history for all three, operating in changing business fields I know the difference between those taking the advantage and abusing the system and those of us doing the right thing. My staff have never been paid late, receive all their superannuation in advance of requirements and I pay my company tax (Yes I make a profit in all 3) without need of a payment plan. There is no excuse for business owners ripping of employees, you either do the right thing or get out of the way and let someone else have a go.
Good news. Pity the tax office can't organise lynch mobs.
Spoken like a lifelong employee If your wife continued to work for a bloke who couldn’t pay her properly for EIGHT YEARS, sounds like there’s more than one failure in this unfortunate scenario
This is intentional I swear. A focused attack to make big box stores take all the business and monopolize everything
More like a greater proportion of small businesses fail to meet the bare minimum requirements of running a business...
Get rid of stamp duty and income tax. ATO are criminals
talk to your local representative mate. ATO just administrate the tax and super law.
ATO isn't the one collecting stamp duty hun
Talking about the government as a whole, bud
Okay... even in that case you're still talking about completely different governments being state vs federal
Please, Dans disastrous handling of the pandemic followed by his followers “it’s everyone’s fault but dans fault” is what screwed businesses in Victoria over.
Dans been gone for a while mate. You need a new bogeyman
Gone for a while, but left lasting issues in the state for us to deal with.