It’s tax time again and if your business is experiencing financial difficulties due to the latest lockdowns, the ATO may be able to help by processing your tax return faster and expedite any refund to you. To be eligible for priority processing, you’ll need to apply to the ATO and provide supporting documents dated within 4 weeks of your submission outlining your circumstances. Financial difficulty may include many situations such as disconnection of an essential service, pending legal action, or repossession of a business vehicle.
If your business is experiencing serious hardship or financial difficulties, you may be able to get priority processing on your tax return which will enable you to get your refund quicker and put it to good use. To be eligible, your business must provide evidence dated within 4 weeks of your submission of the circumstances of the serious hardship or financial difficulty.
According to the ATO, financial difficulty may occur in many situations including but not limited to: business closure, disconnection of an essential service, repossession of a business vehicle, pending legal action for unpaid debts, court orders, settlements, and other necessities the business is responsible for.
As the circumstances of financial difficulty may vary, the supporting documents may be general (ie bank notices, overdraft calls, staff pay records, or eviction notices), or specific (ie disconnection notice for an essential service, repossession notice of a vehicle, notice of impending legal action, payment schedules, or other legal documents).
Businesses can apply for ATO priority processing over the phone or through their tax professional after the lodgment of the tax return in question. Once the initial request for priority processing is received by the ATO, you will be notified and contacted if more information is required. Processing will take more time for those businesses that have lodged several years’ worth of income tax returns of amendments at the same time, and those that have unresolved tax debts.
Before you lodge any priority processing request, you should check the progress of your return through online services, the phone or your tax professional. If the return is in the final stages of processing, you may not need to lodge a priority processing request as the return will be finalised before the ATO has had an opportunity to consider the request.
Remember, priority processing of your business tax return doesn’t guarantee a refund. If your business has outstanding tax or other debts with Australian government agencies, the credit from your return may be used to pay down those debts.
For those businesses that do not qualify for priority processing but are still experiencing hardship, there are various options to assist with cashflow including adjusting GST registration and reporting, as well as varying your PAYG instalments. If your GST turnover is less than $75,000 you may be able to either cancel your GST registration or remain registered but report and pay GST annually or monthly. To vary your PAYG instalments when your business income is reduced, you can lodge a variation on your next BAS or instalment notice and the varied amount will apply to the remaining instalments for the income year.
In addition to the above, if your business funds have been frozen or if you owe the ATO under $100,000, you may be able to either pay your tax by instalments or be eligible for a payment deferral. Remember, however, the ATO doesn’t have the discretion to vary the super contribution due date or waive the super guarantee charge for late payments, so care needs to be taken to avoid penalties in this area.