Bluebird News

Quarterly compliance update

In this update we explore what happens when tax debts are not paid on time, and we also look at other types of taxes that affect individual tax payers such as PAYG Instalments, and how to be smart with your HELP debt. 

Individual Key Dates 

Tax return

We often get asked "What date is my tax return due?" the answer to this question depends on your lodgement and payment history. In most cases if you are a salary and wage income earner and your employer has taxed you correctly you are likely due a small refund. In this case your due date would be 5th of June 2024. In situations where you have had tax debt the prior year, your due date may have been 31st of October 2023. Not to worry, you can lodge at any time with a agent (in some cases we have clients with multiple years) whilst we recommend you do stay on top of your affairs as the ATO do have capabilities to apply interest and penalties for late lodgements. If you are unsure of your personal situation and you would like a personal assessment, contact our office for support.

If you had previously lodged your return and you have a payable your payable was due on the 31st of October. If you are needing to lodge you have time. 

In summary;

• If you have a payable tax return that has been lodged payment is now due
• If you have not yet lodged your return, your return is due on the 5th of June 2024

PAYG Instalment's

What is a PAYG instalment? 

In general, when you have a payable income tax return with more than $2,500 in tax being generated from supplementary income (this is income that is not from salary and wages or have tax withheld against it) the ato will enter you in to the provisional tax system. What this means is the ato will estimate the amount payable in your next return eg, 2024 tax return, and request a amount be paid each quarter to provide for the tax in that return. In a perfect world this would mean that you would then have no tax to pay in the 2024 tax return. 

In essence this is a very helpful system for providing for tax, however, in the first year it always feels like you are paying double (last year and provisional for this year). Over the years it equalises when income remains stable. However, it is normal for this additional income that causes the tax to fluctuate, therefore, we do have discretion to change these instalments to reflect the income you earn on the quarterly basis. This can mean we can increase or decrease the payment to suit your income at the time. 

We encourage you to communicate with us so we can align your instalments with your income. 

In summary:

• If you are in the PAYG instalment system (provisional tax), your Quarter 3 instalment will be due on the:
• 28th of April 2024
• 28th of July 2024

HELP Debt 

If you have a HELP Debt this will incur indexation on the 1st of June each year. This means that you will be charged a flat percentage of the Debt, in 2023 this rate was 7.1%. For example, if your HELP debt is now $10,000 you will be charged $710 on June 1 (this rate will likely be higher for June 1 this year).

Whilst in most situations your employer is withholding for your HELP debt, this does not get applied to the debt until you lodge your income tax return. This is to avoid you over paying the HELP debt. The repayment is based on your taxable income (plus reportable fringe benefits + investment losses etc). 

In the above situation where your employer is withholding and you do pay your debt before the end of May you would get any amounts withheld back in your tax return as a overpayment of PAYG. You can find the HELP debt repayment thresholds here.

• If you wish to pay your HELP debt in full before the interest indexation, the indexation date is the 1st of June. Therefore, payment must be made prior to avoid any indexation charges.

Trading entity key dates 

ATO Crack’s down on payments  

In the last few years we have seen some leniency in terms of ato debt collection. This is no longer the case. This means that if you do have an ato debt it is in your best interest to pay when the debt falls due. We have detailed some of the enforcement action the ato can take below. We want you to know we are here to guide and support you with your ato compliance and we can help you to make good choices to avoid the penalties and any legal action.  

Importantly, the ATO will be issuing reminders for payment much earlier than they have previously. They will take a less tolerant approach when assessing interest charge remission requests. Where you are concerned on ability to make payment by the due date, the ato encourages you to engage with them early.  

What happens when I do not pay on time? 

Let's discuss what happens first when you don’t pay on time:

In situations where you don't pay your debt on time, the ATO will:

- Apply General Interest Charge to unpaid amounts.

- Contact you requesting payment; this may be via SMS, email, or through your tax agent.

- Apply any refunds as credits against the debt.

The ATO is willing to work with you to make payment plans. In some circumstances where the debt exceeds a certain amount or if you have defaulted in the past, a capacity to repay is required.

We recommend entering into a payment plan before the debt falls due and working with the ATO.

Making a plan to support your needs. 

The team at Bluebird Accounting can support you by collaborating with the ATO to develop a plan that fits your needs. We can assist you in setting up a payment plan that is attainable for your personal circumstances.

In certain instances, proof of repayment ability will be required. Our professional service fees are as follows:

- Individual income tax payment plan: $82.50 including GST

- Individual income – capacity to repay starting at $220 including GST

- Entity ATO payment plan starting at $110 including GST

- Entity capacity to repay starting from $550 including GST

What happens if I do not pay my debt or enter in to a payment plan? 

In situations where communication has not been made with the ATO and there is less willingness to pay the debt the ato will undertake firmer action. Which can include any of the following actions being taken, 

Garnishee notice

This is a notice that the ATO can issue to a person or a business that holds money for you or may hold money for you in the future. For example: 

• for individuals this may be your employer or a bank  
• For businesses this may be your financial institution, trade debtors or suppliers of merchant card facilities  

Directors Penalty Notice (DPN)

As a director you do not want to receive one of these. Basically, this is where the ATO will go to the director to collect  

• Unpaid PAYG withholding  
• Net GST  
• Super guarantee charge

Direction to pay super guarantee charge

the ato can issue employers with direction to pay outstanding super guarantee charge. Failure to comply will result in a criminal offence 

Disclosure of business tax debt

your tax debt may be reported to registered credit reporting bureaus.  

Can the ATO take legal action? 

Yes, the ATO can commence legal action in order to collect outstanding debt. You can read more on the ato website which includes the following types of actions:  

• Claim or summons  
• Bankruptcy notice  
• Creditors petition  
• Statutory demand  
• Wind-up action  

You can view the ATO website for more detail. 

The team at Bluebird accounting are here to help you navigate your tax compliance lodgement and payment. 

Our team approach your compliance with our values of attitude, gratitude and care.