By Zilla Efrat

If you have fallen behind on your tax obligations, you could be in luck thanks to a new tax amnesty for small businesses.

The amnesty, announced in the May Federal Budget, aims to encourage small businesses to re-engage with the tax system and will help businesses with overdue income tax returns, fringe benefits tax returns or business activity statements to get their obligations up to date.

The opportunity comes as the Australian Taxation Office (ATO) works to normalise its levels of debt collection after a pause due to the impacts of COVID-19 and recent natural disasters on businesses.

Who is eligible for the amnesty?

The amnesty applies to tax obligations originally due between 1 December 2019 and 28 February 2022.

However, the ATO says small businesses should lodge their obligations even if they were outside this amnesty period as it would consider each circumstance on a case-by-case basis and could reduce possible penalties.

Overdue forms must be lodged by 31 December 2023.

To be eligible, your small business must have had an aggregated turnover of less than $10 million at the time the original lodgment with the ATO was due.

The changing debt landscape

The ATO says small businesses owed $29.3 billion in collectable debt at the end of June 2022 and notes that its emphasis is now on keeping taxpayers engaged, getting them to lodge so they know their position and supporting them to set up a plan to manage their payments.

Over 22% of the ATO’s debt book is now on some form of payment arrangement, which is higher than ever. Small business represents around three-quarters of the number of debt accounts being managed by a payment plan.

ATO Assistant Commissioner Emma Tobias acknowledges that the past few years have been tough for many small businesses.

“We understand that things like lodging ATO forms may have slipped down the list of priorities. But it is important to get back on track with tax obligations.

“Lodging these forms is not optional, so we hope our amnesty will make it easier for impacted small businesses to get back on track.”

To benefit, you will need to lodge your overdue forms with the ATO. It will then remit any associated failure to lodge (FTL) penalties. You don’t need to separately request a remission of these FTL penalties.

FTL penalties can range from $210 (one penalty unit) to a maximum of $1050 (five penalty units) every 28 days that each document is overdue, depending on how big your business is.

The amnesty does not apply to superannuation obligations and excludes other administrative penalties such as penalties associated with the Taxable Payments Reporting System.

In addition, it is not available to privately owned groups or individuals controlling over $5 million of net wealth. It’s also not a “get out of jail free card”. The ATO says companies that benefit from it should still take steps to ensure that they comply with their tax responsibilities going forwards.