As you can imagine, there are many people and businesses that find themselves unable to pay their tax. Often this is due to circumstances beyond their control however the fact remains that the money is owed and ignoring the problem will only make matters worse.
One would think the solution would be to tackle the matter head on and deal with the ATO in a positive and productive manner, sadly in many cases this may not be enough.
Before I begin I do appreciate the ATO is not a credit provider and in a perfect world everyone would pay their tax on time, every time. I am also aware the many laws surrounding financial hardship such as the National Consumer Credit Protection Act (NCCP) do not apply to the ATO.
That being said it is clear that despite people’s best efforts many find themselves struggling financially at one time or another. In many cases people acknowledge their debts and want to do the right thing; they just need a little help and understanding to do so.
While the ATO does have a financial hardship area and states they will help people who are finding it difficult to meet their taxation obligations, there have been many examples of what I believe to be inappropriate and immoral behaviour from the ATO.
I’ll share one such story as I feel many others would have experienced a similar situation and found themselves at the ATO’s mercy, or lack thereof. This person, let’s call her Mary, is a small business owner. Due to a downturn in business along with some personal problems she found herself owing the ATO a large amount of money for GST. Mary was aware she was required to pay her GST, however when people are faced with paying tax or being able to provide for their family they will most likely opt for the latter. Our client’s intention, like many others was to make up for the missed payments as soon as things improved. Unfortunately like many others, Mary’s situation remained challenging and she found herself owing money to the ATO that she was unable to pay in a lump sum.
Mary wanted to do the right thing and arrange a payment plan with the ATO to clear her debt in full. Looking at her current financial situation and taking into account her other debts and fixed living expenses, it was determined that Mary could afford $2,200 per month towards this debt. Payments at this level would have seen the debt paid in full over a reasonable period. The ATO was provided with a detailed Financial Position Statement along with supporting documents that confirmed without question the amount offered represented a true and accurate portrayal of her current financial position and was the best she could do at this time.
One would have thought that the ATO would have been happy to find Mary was taking a proactive stance towards her debt and was willing to commit to significant monthly contributions, but like many others this did not prove to be the case.
We soon received a letter from the ATO headed up “We can’t accept your payment offer”. One paragraph of this letter said: