The ATO has reminded eligible small business taxpayers to take advantage of the judgement penalty amnesty program announced in the recent 2023-24 Federal Budget.

What tax obligations are covered by the Amnesty?

It applies to tax obligations covering income tax returns, business activity statements, or fringe benefits tax returns originally due between 1 December 2019 and 28 February 2022. Superannuation obligations and penalties associated with the Taxable Payments Reporting System are not included as a part of the program. The amnesty will run for the period 1 June 2023 to 31 December 2023. "The past few years have been tough for many small businesses, with the pandemic and natural disasters having a significant impact. We understand that things like lodging ATO forms may have slipped down the list of priorities. But it is important to get back on track with tax obligations. Lodging these forms are not optional, so we hope our amnesty will make it easier for impacted small businesses to get back on track." – ATO Assistant Commissioner, Emma Tobias

Turnover Eligibility

To be eligible for the amnesty, small businesses must have an annual turnover of less than $10m at the time the original lodgment was due, and lodge relevant overdue forms and returns between the amnesty period (ie 1 June 2023 to 31 December 2023). It should be noted that the amnesty does not apply to privately owned groups or individuals controlling over $5m of net wealth.

Failure to Lodge Penalties will be proactively remitted

According to the ATO, where eligible small businesses lodge relevant overdue forms and returns during the amnesty period, any associated failure to lodge (FTL) penalties will be proactively remitted and businesses will not need to separately request a remission. It flags that some taxpayers may see a FTL penalty on their account for a short period of time but reassures eligible taxpayers that it will be remitted as per the amnesty.

No other admin or GIC will be remitted

Although FTL penalties will be remitted, the ATO emphasises that no other administrative penalties or general interest charge (GIC) will be remitted as a part of the amnesty. Therefore eligible small businesses with an existing debt or that accrue a new debt through late lodgment may still have GIC applied to those debts. The most current annual rate of GIC (for the July – September 2023 quarter) is 10.90%.

What to do If you're outside the amnesty eligibility

In addition, the ATO also encourages those businesses outside the amnesty eligibility to also lodge any overdue forms or returns to avoid being classified as not being actively engaged with the tax system which is a red flag which may lead to other action. While FTL and other penalties may apply to those businesses lodging outside of the amnesty, the ATO states that it will consider the unique circumstances of every business taxpayer and may remit penalties on a case-by-case basis.

Payment plans available for debts

Small business that may be concerned about debts which may arise once they lodge their overdue forms or returns can take comfort in ATO's assurances that it will work with taxpayers to figure out the right solution for each situation. This includes having a range of support options available, including payment plans, compromise of tax debt, or deferring repayments. Some small businesses may also be able to set up their own payment plan online through either MyGov or the ATO Business Portal.

Want to take advantage of the amnesty?

If you're a small business and would like to take advantage of the amnesty to get your lodgments up to date, we have the expertise to help. Contact us today for all your tax, BAS and FBT needs.

Please also note that many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. Should you have any further questions, please email us at RGA Business and Tax Accountants at reception@rgaaccounting.com.au . All rights reserved. Brought to you by RGA Business and Tax Accountants. Liability Limited by a scheme approved under Professional Standards Legislation.