Company ‘wind-up’, otherwise known as company liquidation, involves ceasing a company’s operations after it becomes unable to repay its debts as they fall due. Whilst there are typically two means by which a business winds up, either voluntarily as decided by the company directors or involuntarily by court appointment, the last months have seen a surge of applications submitted by the Australian Taxation Office.
In May 2015 alone, the ATO applied to wind-up 556 businesses – this figure is more than double the number of applications lodged in July of last year.
From this steady rise of wind-ups at the hands of the government, it can be seen that the ATO is starting to crack down on Australian companies who have tax debts.
So what does this mean for Australian companies? Is anyone safe from the ATO’s ‘pay up or wind up’ orders? Will Directors still be given the opportunity to opt for professional business debt solutions to rectify their financial issues?
The need for businesses to adopt financially smart strategies is becoming more vital than ever. This includes:
- Drafting monthly company budgets
- Strict compliance with your tax obligations and lodgement of quarterly BAS lodgements
- Doing thorough research to source the lowest cost contractors when outsourcing work, whilst ensuring to not compromise quality
- Chasing clients to ensure they are paying professional fees on time
- Looking to restructure the business if necessary
- Eliminating finance charges such as late payments on loans, credit card processing fees, and membership fees on certain business credit cards.
- Revisiting your marketing and advertising strategies to ensure your message is effectively reaching your audience
As the number of wind-up applications increase, it is clear that the ATO are changing their focus and increasing enforcement. As well as placing an increased pressure on SMEs to maintain solvency, the ATO is also looking at issuing director penalty notices for directors who are personally liable where businesses have failed to pay their tax obligations and employee superannuation entitlements.
To find out how ISA can help you avoid the ATO crackdown, contact our toll-free hotline on 1800 003 883. We’re available 24 hours a day, 7 days a week.