Small businesses given rare opportunity to get back on track with tax

The end of the financial year is a busy time for small businesses. Some may even put tax returns and related paperwork on the backburner. But this year the Tax Office is offering an amnesty to help small businesses get back on track.

The Australian Taxation Office (ATO) is encouraging small businesses that have overdue income tax returns, fringe benefits tax returns or business activity statements to take advantage of a new amnesty to get their lodgements in order[i].

The amnesty was announced in the 2023–24 Federal Budget, and it applies to tax obligations originally due between 1 December 2019 and 28 February 2022.

To be eligible, a small business must have aggregated turnover below $10 million at the time the original lodgment was due.

How long does the amnesty last?

The amnesty runs from 1 June 2023 to 31 December 2023. That’s a six-month window for small businesses to sort overdue forms, and the ATO will overlook any ‘failure to lodge’ (FTL) penalties.

ATO Assistant Commissioner Emma Tobias says, “The past few years have been tough for many small businesses, with the pandemic and natural disasters having a significant impact.

“We understand that things like lodging ATO forms may have slipped down the list of priorities. But it is important to get back on track with tax obligations.”

Tobias warns that lodging these forms is “not optional”

How do I take advantage of the amnesty?

All you need to do is lodge your outstanding tax returns or activity statements and the ATO will remit the FTL penalty – a saving of up to $1,375.

The amnesty only wipes FTL penalties. Small businesses still have to pay their tax dues.

On the plus side, the ATO may be able to make the tax take more manageable.

Tobias says, “We understand that some small businesses may be worried about paying an amount owing on their overdue lodgment. If you are unable to make full payment of your debt, remember we can work together with you or your registered tax or BAS agent to figure out the right solution for you.”

Why your business should take advantage of the amnesty

Running late with tax lodgments can be an early indicator that sees a small business flagged for a tax audit.

Frankly, no small business needs that sort of disruption and stress.

Cameron Poolman, CEO of OnDeck Australia explains, “If you aren’t sure about whether your small business is up to date with all the ATO paperwork,  talk to your tax professional. They can set your mind at ease or get the ball rolling to help you take advantage of the amnesty.”

The amnesty applies to income tax returns, business activity statements, and fringe benefits tax returns. It does not apply to employee superannuation obligations.

[i] https://www.ato.gov.au/Media-centre/Media-releases/Small-businesses-given-opportunity-to-get-back-on-track/

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