We have noted a trend in our recent conversations where the ATO is becoming more aggressive in their approach to payment arrangements. In cases where previous arrangements have been renegotiated or have defaulted, regardless of the reason for default the ATO has been less willing to accept a new payment arrangement unless the taxpayer provides the ATO with information surrounding their business/tax position.
This includes, but has not been limited to:
- Bank Account details
- Current balances of bank accounts
- Information regarding overdraft facilities available to the taxpayer, and the current balance of the overdraft
- Any large assets owned by the taxpayer
- Any large liabilities the taxpayer owes to other entities, such as a bank loan or financing arrangement
- An estimate of current monthly income and expenses
- An outline of the taxpayer’s current situation, including an explanation as to why the taxpayer is unable to pay the debt in full
- What alternative sources of finance have been looked at by the taxpayer as a means to pay the ATO
- What amount the taxpayer is able to pay upfront (within 7 days of negotiation of the new payment arrangement)
In effect the ATO has been demanding an outline of the taxpayer’s cash flow, saleable assets, obligations to other entities and generally acting with an expectation that the taxpayer prioritise payment of ATO obligations.
We have found that in many cases we have successfully negotiated payment arrangements with the ATO, however the above scenario needs to be kept in mind as each arrangement runs a risk of this level of information being requested.