Company tax debt a 'time-bomb waiting to go off'
The spreading of company tax debt is "a time bomb waiting to go off", according to Hall Chadwick accountants and business advisers partner Richard Albarran.
An expert in insolvency and business recovery, Albarran said more companies than ever before are resorting to (voluntary) administration over taxes.
"Companies across Australia are trading near the edge, and many are running up high debts in unpaid taxes."
Albarran said claims against companies by the Australian Taxation Office in the form of penalty notices issued against directors for pay-as-you-go (PAYG) remains the single biggest trigger for directors placing companies into voluntary administration.
He said figures from the Australian Securities and Investments Commission (ASIC) reveal 517 companies entered administration in January this year, up 28 per cent from January 2008, according to Albarran.
"In NSW alone, the ASIC figures 216 companies entered external administration in January 2009, up 38 per cent from January 2008.
"The tax commissioner can make directors personally responsible for a company's tax debts, so it is crucial for directors to monitor their company's finances early to avoid being issued with a notice," Albarran added.
"Once a notice has been issued, there is usually little choice for a company but to go into voluntary administration.
"Usually, businesses get to a point where they cannot comply with notices as they can't afford to pay.
"They find they cannot meet the 14-day deadline to pay and the only option left for them is voluntary administration," he said.
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