Help for small business?

Members of the Federal Government are often heard to say that they want to help small business and I suspect that this is one area that politicians on both sides of the political divide would agree.

However, the opposite appears to be true when dealing with the government's revenue collection arm, the Australian Taxation Office.

Their role appears to be to collect any tax that's due at any cost, even if it means putting people out of work and businesses closing down to do so.

Having dealt with hundreds of different small businesses over the years as clients advertising in Peninsula News, it is pretty clear that most, if not all, proprietors have not skipped away to a foreign country to spend their earnings and thereby defrauding the ATO.

They are usually hard working people, working longer hours than any paid employees, if they have any, struggling to make ends meet, to pay bills as they fall due and to keep the business going.

This often means that GST received in their unwanted role as the Government's tax collector, for example, is used for rent, wages or to pay for stock, leaving the GST unpaid until other income covers it.

The ATO of course is not interested in any excuses if you fall behind.

They fine you for a late BAS return and they'll gladly fine you more when you can't pay all the BAS due on your return.

If you fall behind, they'll insist on a promised payment plan to cover arrears and future BAS payments, even if income varies from week to week and a set amount cannot be promised.

If difficulties cause a payment to be missed, then they'll want the full amount within seven days, knowing full well that such a payment will be impossible.

This will then provide the trigger to be used as an excuse to commence legal action, adding court costs and interest.

I can understand this from a bank perhaps, and even they go to great lengths to avoid such proceedings.

But when the ATO does it, they have a reputation for being ruthless in the extreme and the final outcome is extremely damaging for the small business, its employees, suppliers, land lord etc.

In short, it's also a disaster for the economy and flies in the face of the government's supposed aim of helping small business.

To make matters worse, the ATO charges interest on any amount not paid by a due date of course.

While the current cash rate is 2.5 per cent, you would expect that, or something close to it, to be the rate charged by the ATO.

Of course not, what are you thinking?

They charge nearly four times that amount at 9.6 per cent making an outrageous 300 per cent profit, and not just monthly, but on a compounded daily basis to make sure that they get every last cent for the days within a month as well.

I don't think that even the banks are that greedy and that's saying something.

In fact the ATO is better off if everyone is late with their payments because they'll make more money on the ridiculous interest rate they charge than they would if they had received the money on time and used it for its intended purpose.

Email, 19 Dec 2013

Cec Bucello, Tascott