Financial Fixer, Ginette Muller

Advice from Financial Fixer Ginette Muller

It needn’t take a Chief Economist to tell us the economic road ahead looks ‘rocky’ and that trading conditions are weakening due to the lockdowns. And yet, not so long ago, according to those in the know, there were and still are sectors in our economy doing really, really well. Especially early in 2021, many businesses were quite frankly booming. The problem unfortunately, was that whilst sales might have been going through the roof, the profits were going through the floor. They were and continue to be slim to non-existent; commonly referred to as a green drought. Well, it’s not all bad news. According to ASIC, the number of insolvency appointments in the last 12 months are half the 5-year average. In a bizarre twist, the insolvency industry is another casualty of the COVID-19 pandemic, caused by generous government stimulus, record low interest rates, and a seismic shift in the debtor/creditor relationships that exist in modern day Australian business. ATO, Banks and Creditors are only human after all!

Recently, I have been contacted by a number of businesspeople who have companies that are contemplating ceasing to trade and unsurprisingly they have tax debt that simply cannot be met. Each situation is different, but without much variation, my key piece of advice to directors is: make sure you are compliant.

Step 1: Lodge your BAS and your tax returns – then let’s talk about the options available to sort out the liability.

Which brings me to the issue of how to deal with creditors – the ATO and Banks included. Firstly, everyone has been through the events of the last 18 months together, we all have experienced the shock that something so insidious as a virus could destroy so much that we all took for granted. Creditors also have suffered and are acutely aware of their obligation to debtors, to treat those they deal with reasonably and not make the trauma any worse than it needs to be. The tax office has specifically said that businesses should be able to exit the corporate world with dignity. There are some caveats of course – and for the most part that is, you do the right thing, be honest and transparent with your creditors and you can expect that they will treat you with fairness and with dignity. If any of this resonates with you, get some advice from a reputable person. Obviously, The Solvers can point you in the right direction but also consider speaking to the Tax Office. Depending on your circumstances, they may be able to: give you extra time to lodge and pay your tax; set up a payment plan tailored to your situation; remit penalties or interest; process your tax return as a priority; prevent any tax refund you may be due to receive from being used to pay debts with other government organisations and defer your tax lodgement and payment due dates. Whatever issue you face, it comes down to getting the right advice for the issue that you have. It is not easy to find the right person because they will say they can help you with your problem but unfortunately, to a person with a hammer, everything looks like a nail! So, research your advisor thoroughly before you take the plunge. Until next time, remember that a problem shared is a problem halved.