ATO Crackdown: Rising Demand for SME Loans Creates New Opportunities for Brokers

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As harsher penalties are applied, more SMEs are seeking to refinance their tax arrears. Here’s what brokers need to know about the new penalties, and refinancing options.

The ATO Crackdown: Rising Demand for SME Finance Creates New Opportunities for Brokers

The Australian Taxation Office has cast a fearful shadow over business owners after its recent announcement that it will take “timely” and “stronger action” against SMEs in Australia with outstanding tax debt. In addition to regular penalties for late repayments, businesses now risk damaging their credit scores by falling behind on payments, potentially hindering their ability to access finance.

More and more brokers are seeing their clients fall behind on tax debt repayments or neglecting the ATO altogether. Payment of a large outstanding debt will impact a SME’s cash flow and can have major ramifications for their finances. Here’s what you need to know about what the ATO crackdown means for small businesses, and how they can refinance with no hassle and no paperwork.

Harsher New Penalties for Not Paying:

It’s not in the ATO’s interest to go around collecting debts and crippling small businesses.  However, they have become much harsher on businesses that are accumulating outstanding debt and not paying it off.

Here are what the new penalties will look like:

  1. Tax debt will start to accrue interest, regardless of whether the business is engaged in a payment plan with the ATO.
  2. The ATO will apply any tax refunds the business is eligible for directly to the outstanding amount to reduce the overall debt.
  3. Without a payment plan in place, the ATO can refer the business’ debt to credit collection agencies such as Collection House and Dun & Bradstreet. This is where ATO tax arrears can really put a business’ credit score at risk.
  4. If debts are still ignored, the ATO may garnish debt from a business’ bank account without their approval.

Failing to Lodge and Failing to Pay

Many businesses all make the same mistake of thinking that because they are unable to pay, they shouldn’t lodge at all. This just makes a bad situation worse as there are separate penalties for both failing to lodge and failing to pay. The ATO will look more favourably on businesses that make early contact, so it’s always good practice for SMEs to lodge on time, even if they can’t pay immediately.

Managing Debt: What are the Options?

While the ATO do offer their own payment plans for businesses looking to settle their debts, these aren't always suited to SMEs. Just one late repayment will mean that the full debt is due immediately, with further penalties following. An easier alternative is to refinance by taking out an unsecured business loan.

By refinancing their tax debt, a business can pay off the outstanding amount in full and eliminate any potential penalties from the ATO. It also means a business’ credit score will be protected, so that they maintain the ability to access finance in future. Refinancing also gives a business more control over their cash flow, as they can manage loan amounts and repayment schedules.

Brokers are in a unique position to offer their small business clients an alternative to the tax office; one that their clients may not even be aware of. Many small business owners may think that the ATO is their only option for managing their tax debt.

Moula has helped hundreds of businesses refinance their tax debt, offering flexible loan options with quick, easy access to funds. The process is designed specifically to cater to small businesses and allows business owners to take full control of their cash flow.   

Bruce got in touch with Moula for some working capital to assist in financing his $37,000 ATO liabilities. With the proposed changes in relation to ATO arrears impacting his credit score, he made the decision to act now to clear his ATO balance. After going through our ten-minute application process online, we told him he was eligible for up to $60,000.  He received the funds in his account the next day, which he used to refinance his tax arrears, as well as pay for a bigger stock order for his retail business.

If you have a client with outstanding tax debt, they can access up to $250,000 in 24 hours. Refer them today through Moula’s partner program, or call 1300 794 920.


ATO Crackdown: Rising Demand for SME Loans Creates New Opportunities for Brokers
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