The Federal budget may be redolent with overtures to small business but figures obtained by Sydney Insolvency News (SiN) show that the Australian Tax Office (ATO) has embarked on a debt recovery jihad against SMEs.
In the past six weeks, wind-up applications issued by the ATO have soared, from around 50 per month in March to more than 100 in April. A wind-up application is the first step in placing a company into liquidation. And the trend suggests wind-ups issued this month will total many hundreds.
On May 15 the ATO issued almost 50 notices to wind-up businesses. Yesterday, a further 32 were added to the snowballing tally. Today another 21.
Figures compiled by specialist business advisory Jamieson Louttit & Associates indicate that this month the ATO is likely to initiate more wind-up actions against non-paying corporate entities than in any other month since July 2014, when it threatened to liquidate non-payers on approximately 225 occasions.
Jamieson Louttit told SiN the sudden spike was an acknowledgement that SME's with outstanding tax debts were a legitimate target for a cash-strapped government.
"They've got to collect money. That's where I think it's stemming from," Louttit said today, adding that the winding up notices would galvanise a proportion of the non-payers into compliance.
"A lot of those companies who've been issued wind-ups won't go into liquidation because getting the notice will persuade them to pay.
"There's also the issue of Director Penalty Notices (DPNs) and Garnishee Notices. You don't get to see those because they are not publicly available but insolvency practitioners and lawyers will tell you that there has been a significant increase in those as well," he said.
ATO deputy commissioner Cheryl-Lea Field confirmed the ATO was ratcheting up recovery action, warning that approximately 50 per cent of companies issued with a wind-up notice will be forced into liquidation.
"We took a supportive approach during the GFC and said we weren't going to take small businesses to the wall but I think it's time now for us to recalibrate and address that small number of people that are getting an unfair financial advantage," she said.
"Our first focus is on the majority of people who pay on time. Our second focus is on helping people who get into financial difficulty. Our third focus is to ensure that those people who are getting that unfair financial advantage are getting addressed in a more timely way".
More timely action was a theme flagged recently by ATO commissioner Chris Jordan.
In the past six weeks, wind-up applications issued by the ATO have soared, from around 50 per month in March to more than 100 in April. A wind-up application is the first step in placing a company into liquidation. And the trend suggests wind-ups issued this month will total many hundreds.
On May 15 the ATO issued almost 50 notices to wind-up businesses. Yesterday, a further 32 were added to the snowballing tally. Today another 21.
Figures compiled by specialist business advisory Jamieson Louttit & Associates indicate that this month the ATO is likely to initiate more wind-up actions against non-paying corporate entities than in any other month since July 2014, when it threatened to liquidate non-payers on approximately 225 occasions.
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| Insolvency Notices data courtesy of Jamieson Louttit & Associates |
Jamieson Louttit told SiN the sudden spike was an acknowledgement that SME's with outstanding tax debts were a legitimate target for a cash-strapped government.
"They've got to collect money. That's where I think it's stemming from," Louttit said today, adding that the winding up notices would galvanise a proportion of the non-payers into compliance.
"A lot of those companies who've been issued wind-ups won't go into liquidation because getting the notice will persuade them to pay.
"There's also the issue of Director Penalty Notices (DPNs) and Garnishee Notices. You don't get to see those because they are not publicly available but insolvency practitioners and lawyers will tell you that there has been a significant increase in those as well," he said.
ATO deputy commissioner Cheryl-Lea Field confirmed the ATO was ratcheting up recovery action, warning that approximately 50 per cent of companies issued with a wind-up notice will be forced into liquidation.
"We took a supportive approach during the GFC and said we weren't going to take small businesses to the wall but I think it's time now for us to recalibrate and address that small number of people that are getting an unfair financial advantage," she said.
"Our first focus is on the majority of people who pay on time. Our second focus is on helping people who get into financial difficulty. Our third focus is to ensure that those people who are getting that unfair financial advantage are getting addressed in a more timely way".
More timely action was a theme flagged recently by ATO commissioner Chris Jordan.