ATO to resume collection of $40billion company tax debts

This could have deep and wide ramifications.

Reminds me of the start of the recession/ GFC (end of 2007 start of 2008) in the UK again.

Interesting, apparently a business owner is twice as likely to be in personal Mortgage arrears as “the general population”.

https://www.abc.net.au/news/program...s-of-companies-to-fold-as-ato-chases/13899252

 

You have to seriously consider the viability of the business if it's not making enough to service its liabilities. Directors should bear full liability and face long term bans, damage to credit record and inability to act in any managerial capacity or position of influence within any company for many years including garnishment of income until debt is paid.

None of the claim bankruptcy and walk away after a few years.

 

I must say though Scott, I know a lot of business owners in construction who have been taking on work at little to zero margin because they feel a moral obligation to keep food on the tables of their employees. I feel for these people and have admiration for what they did/ do.

The BAS breathers a Covid-incentives over the last few years provided much needed reprieve for a lot of businesses (an awful lot took advantage too).

This really feels like 2007/ 2008. It has all the hallmarks.

 

Just wondering if the ato and the legal system has the capacity to collect such a large amount of money.

The courts are clogged up enough as it is. I dropped off a neighbour the other day and the place was packed.

 

Yeah I imagine this would be nasty for sectors/businesses that are struggling. Deferring taxes was an option during Covid many businesses would've taken on for cash flow management, and it is often the lumpiest of cash outflows for businesses.

Construction likely to be the worst hit when the ATO comes knocking for its money. Many of their cash flows probably cant absorb it.

Unsure whether heavy hitting hard nose approach is best...if we did this during covid, there would have been many many businesses that would never have reopened and many homeowners giving in the keys (if banks were nasty).

Hopefully they can work together with businesses can come up with meaningful solutions to protect the taxpayer and assist with business viability.

 

Doesn't come as a surprise given the below:
ATO takes almost 50% (highest tax rate) once you hit about 180k
10% goes to super
10% goes as gst

Business owners left to live off 30% of what they are generating after a certain point. Ridiculous to say the least!

 

Thanks to Johnny n Amber, every court is packed these days


PS: @datto thanks for the ride the other day.

 

It gets even better once you cross 250k,
they take an additional 15% cut from you super contribution.

PS: I am talking about payg
Just curious: If you are a business do you have to pay yourself higher income?
can you just keep it in business and rollover?

 

Oh yes the div 293

 

You can ofcourse but at some point you will take it out right?

 

Once in a generation opportunity to fix the construction industry but at what cost.

Last few years plenty of builders and subcontractors have been on a knife edge with this stuff. It's been talked about in the tier 1 world for awhile, once these debts start being chased up it will send more subcontractors to the wall. Less competition and the larger or more profitable companies will remain.

There's also a change in developers/purchasers looking for quality and a name that will be around after the warranties are finished. This will also drive business towards the top end of town but these guys are expensive and busy.

There's already lots of talk of rise and fall clauses in contracts and reevaluating how risk is allocated through the supply chain. The industry has been mispricing risk for decades and have been getting squeezed on tighter margins, rising labour costs and now rising material costs.

Even after all this blows over I don't think the industry will go straight back to 2% margins. It's their opportunity to increase their margins and not get backlash from the developers, it will be passed on to purchasers and costs will remain elevated.

Thus concludes my crystal ball gazing for the day.

 

Yes rise and fall clauses are being discussed across the industry, even by developers (which in itself can open a realm of disputes to keep CAs and Lawyers busy) along with enforcing fixed price expiry periods and material escalation clauses.

Ultimately though, there will always be one company willing to adopt a slightly lower risk threshold (or who have priced something incorrectly) and developers are greedy and ruthless. They’re happy to rinse and repeat with Builders.

 

Did they take their toothbrush with them just in case?.

 

Must be the one I found between the seats lol....his loss.

 

This, and yet no one even talks about quality side of things which is a massive issue in itself. Construction quality over years (for vertical or horizontal builds) has deteriorated significantly and I don't see any substantial efforts from the concerned authorities towards improvements in the rigour of quality check inspections, standard adherence, etc and penalising the builders who are delivering sub-standard products at an ever increasing costs. I wonder when will media start talking on this serious issue?

It's so disheartening to compare the new homes with older red-brick construction just to realise that the older stuff was far stronger and of much better quality in almost every aspect. It just feels like the ethics have gone backwards even though science and technology have progressed.

 

You haven't followed the work of the NSW Building Commissioner

David Chandler OAM on LinkedIn: #AnyWhereAnyTime #FairTrading #RABAct | 82 comments

 

I don't think so, plenty of discussion around the opal towers crisis which has lead to big reform in NSW. Again I've heard it from developers specifically talking to reputable builders rather than shopping it around to anyone who will put a number on it. The problem there is they're more expensive than others so the feasos get squeezed and sometimes the projects don't stack up anymore, all a fine balancing act.

So on top of the quality issue you now have the extra fear of builders going broke and being left with an unfinished building etc etc. Will be an interesting few years coming up anyway

 

Beat me to it

 

Company tax rate is 25% in most cases. If they have enough profits to tax that is. If they had enough to pay someone $200k in wages they must also be doing alright.