Budget 2023: ATO offers late payment penalty amnesty to SMEs as it claws back billions in COVID-era debt

The Australian Taxation Office (ATO) will offer an amnesty to small businesses which have fallen behind on their payments, pledging to scrap failure-to-lodge penalties for enterprises at risk of disengaging with the tax system altogether.

The 2023-2024 federal budget reveals the Australian Taxation Office will not apply failure-to-lodge penalties for some small businesses with an annual turnover of less than $10 million.

The amnesty is limited to penalties that would otherwise apply to outstanding tax statements lodged between June 1, 2023 to December 31, 2023, which were originally due between December 1, 2019 to February 29, 2022.

The latter timeframe reflects a period defined by COVID-19 and widespread economic hardship, effectively giving small businesses another chance to make good on debts incurred through a period of historic leniency from the ATO.

While the measure may at first appear like a continuation of the ATO’s gentle approach to struggling small businesses, the numbers reveal it is anything but.

The ATO will also be plied with funding to chase publicly-traded firms and well-off individuals for old debts.

“The additional funding will facilitate ATO engagement with taxpayers who have high-value debts over $100,000 and aged debts older than two years where those taxpayers are either public and multinational groups with an aggregated turnover of greater than $10 million, or privately owned groups or individuals controlling over $5 million of net wealth,” the budget papers state.

The federal government expects the amnesty and extra ATO funding will spur businesses to cough up $718 million over the five years from 2022-2023, a significant sum as the ATO claws back some $30 billion in collectable debts held by the small business sector.  

Those measures are not projected to help the government’s bottom line alone, however. In a surprise addition to the Albanese government’s push to expand and protect the superannuation system, the inflow of late payments is expected to see $12.3 million in unpaid superannuation flow through to employees.

To see SmartCompany‘s full budget coverage, click here.