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ATO extends BAS payment arrangements

Joe Kaleb - Tax Expert
September 21, 2010

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On 1 June 2009, the ATO introduced two initiatives to help small businesses that are struggling to manage their activity statement payment obligations. These measures have been extended for a further 12 months until 30 June 2011.

These two initiatives are:
  • Twelve-month general interest charge (GIC) free payment arrangements.
  • Deferred activity statement payment due dates.

A small business is one having a turnover of less than $2 million GST exclusive.

Twelve-month interest-free payment arrangement

The ATO is extending the 12-month general interest charge free concession for mutually acceptable and sustainable payment arrangements entered into for activity statement (such as BAS) debts negotiated from 1 July 2010 to 30 June 2011. This concession may also apply to payment arrangements negotiated prior to 30 June 2010 that are subsequently renegotiated.

The ATO website states that the GIC concession only applies to activity statement debts which includes GST, PAYG withholding and PAYG tax installments. It does not therefore apply to income tax or superannuation guarantee debts.

The actual GIC-free period (maximum of 12 months) commences on the day the payment arrangement is entered into with the ATO and ends day on the day the final installment is due.

Where the activity statement debt has been passed to a debt collection agency, the business can enter into a GIC-free payment arrangement with the relevant agency.

Businesses should call the ATO as early as possible on 13 11 42 if they would like to take advantage of this concession, or contact the ATO via the Business Portal. An alternative for businesses with debts less than $25,000 is to call the ATO’s automated phone service on 13 72 26 which operates 24/7.

Regardless of which method is used to contact the ATO, businesses will be eligible for a GIC free payment arrangement. Once the arrangement is approved, businesses will receive a letter of confirmation together with payment slips, or the ATO may require the business to enter into a direct debit payment arrangement.

It’s very important that businesses contact the ATO immediately if they are unable to comply with the negotiated payment arrangement, otherwise the ATO can commence legal action without notice and the interest free concession will no longer apply. 

Deferred activity statement payment due dates

Small businesses experiencing cash flow problems can also request an interest free payment deferral on their next activity statement. Businesses that pay quarterly and annually may be granted a deferral of up to two months, with those that pay monthly eligible for up to one month.

Activity statements eligible for this deferral include:

  • Monthly statements for the period July 2010 to June 2011 (inclusive).
  • Quarterly statements for the period September 2010 to June 2011 (inclusive).
  • Annual statement for the 2009/10 income year.

A payment deferral request must be made on or before the original due date of an activity statement debt.

To apply for this concession, businesses can contact the ATO on 13 11 42, or via the ATO Business Portal.

Activity statements still have to be lodged on time otherwise a late payment penalty may be imposed for late lodgements. Businesses can still apply for an extension of time to lodge activity statements.

This article is from the small business information website

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published: Tuesday, September 21, 2010

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