Australian small businesses owe so much money to the tax office that a government crackdown on debt may disrupt bank profits.
According to analysis firm East & Partners, small businesses owe the ATO a total of $9.96 billion, compared to a total of $11.3 billion in bank loans to the sector.
East defined small businesses as those with annual turnovers of $2 million or less.
The ATO has offered some of those businesses interest-free payment arrangements since June 2009 to help them survive the GFC.
Tax debt is typically subject to a general interest charge of about 10%.
“Over time, the tax department has become quite indulgent towards small businesses,” East’s head of markets analysis Lachlan Colquhoun told Business Insider Australia.
“If the ATO were to jump up and down and say, ‘we want our money right now’, that could be a little troublesome for banks.”
That makes an article by Adele Ferguson of the Sydney Morning Herald this morning rather concerning.
The SMH reports that the ATO has driven nearly half of the 1365 wind-up notices served to Australian small businesses in the past three months.
According to the report, the ATO was behind 51% of about 613 wind-up notices last month, compared with only 27% of 184 notices in July 2008. The ATO has contested these figures.
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