A strong working relationship between a client and their accountant can be complex and demanding, yet rewarding on a personal level. It is the single most important foundation between the two in order for an accountant to achieve the best outcomes for their client.
While it’s imperative for an open line of communication between both parties, it’s just as important to ensure it is done so in a timely manner. This holds particularly true with recent changes proposed but not very well publicised by the Australian Taxation Office (ATO).
This particular area of scrutiny going forward is that “any entity with a registered Australian Business Number (ABN) who has a tax debt equal to, or in excess of $10,000 which is 3 months overdue or more”
The proposed changes would see those who fail to comply be reported to CreditorWatch, in addition to being liable for the usual general interest charges applied by the ATO. Whether a scare tactic or a strategic move is certainly left open to interpretation but the possible ramifications of a bad credit rating should definitely be enough to change the outlook of many.
The possible downfalls of a bad credit rating on a trading entity can include but are not limited to:
- Difficulty attaining finance (business & personal)
- Difficulty entering lease/rent agreements.
- Increased insurance premiums
- Increased interest rates
- Lost job/work opportunities
- Non-negotiable terms of credit terms on purchases i.e. cash on delivery only
- Professional memberships/licenses being rejected or cancelled
- Stress and/or tension on personal & business relationships
Figures from the Australian Bureau of Statistics show that there are in excess of 2.17 million registered businesses trading around Australia as of June 2016 which is an increase of 2.4% (roughly 52,080) since June 2015.
This means there will be an increase in demand to have accountants do tax planning to avoid falling into any unplanned traps. This should also become transparent in the urgency of having work completed more diligently. This is actually a positive side-effect of the proposed changes from the ATO and would be beneficial to all involved.
If you are currently trading under an ABN, it’s probably a great time for you to get in touch with your accountant to make sure all your needs and expectations are addressed whether be old, current or future work. As Jerry McGuire says “Help Me, Help you”.
Give us a call on 08 62672200 if you need help sorting through your tax affairs.
Adam Kitching – Accountant