ATO more aggressive
The Australian Taxation Office (ATO) is getting more aggressive on late payment of outstanding tax and superannuation contributions, Deloitte partner Darren Mitchell has warned.
“Any missing payment and the ATO is now on to it immediately,” he said.
“They are definitely moving to wind up more companies immediately for non-payment.”
Mitchell said the ATO was averaging nine applications a day to wind up companies, which is almost double what they were doing last year.
“The ATO used to use winding-up orders to start negotiations with companies, but now they just go straight to the winding up stage,” he told a Dealer Group restructuring workshop in Melbourne.
“It is a real change of attitude.”
The ATO is also checking that compulsory superannuation contributions are being paid on time, Mitchell said. “The ATO is stamping down on payments and they are not allowing them to build up,” he said.
Businesses are also coming under scrutiny from the Australian Securities and Investments Commission (ASIC) as the regulator is also watching for the warning signs of companies running into trouble.
“ASIC is watching all business, from listed companies down to the small entrepreneurs,” Mitchell said.
“They are also getting reports from credit rating agencies and they are now talking to the ATO for the first time.”
The other unknown facing businesses is bank attitudes to company debt.
“At present, the banks don’t know what to do about companies in trouble with large debts,” Mitchell said.
“They don’t want to go back to the slash and burn processes they did in the last recession.
“But it will only take one bank to start this process and the rest will follow.”
He said the best move a company that is breaching its loan covenant can make is to talk to the banks.
“Banks don’t like getting surprised, so it is better to get on the front foot,” Mitchell said.
“Try and stay with the relationship people at the bank, because if the case is moved to the credit management people, they are more aggressive.”
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