While many workers relish tax time as a chance to pocket a tax refund, it can be a different case for small business owners. The end of the financial year brings a raft of reporting requirements, often followed by a tax debt.
It’s hardly something to look forward to, but the vast majority of small enterprises pay their way. There are more than five million small businesses in Australia and they contribute around 30% of total income tax paid.
In 2019-20, for instance, small businesses collectively paid $90 billion in tax. However, the Australian Taxation Office (ATO) believes this tax haul should have totalled $102 billion – a gap of $11.9 billion, or 11.6% below expected tax revenue.
Under our system of self-assessment, it can be tempting for time-poor or cash-strapped small businesses to sweep tax returns under the carpet, possibly with plans to get around to lodging and paying tax dues at some point in the future.
The catch is that tax debt doesn’t simply go away. On the contrary, the sum owing balloons, often engorged by “failure to lodge” (FTL) penalties, which can go as high as $1375.
This story is from the August 2023 edition of Money Magazine Australia.
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This story is from the August 2023 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
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