Tax tips for those who owe

For individuals and companies with tax liabilities from last year’s tax return, 31 March was the due date for lodging tax returns.

At the end of 2018, tax debt had reached $23.7b. While the fear of more liabilities or pressure of unpaid taxes may cause further postponement, you may want to reconsider.

Dealing with debt

Whether you’re filing as a business or individual, if you don’t pay your tax debt on time, the Australian Taxation Office (ATO) will automatically add a general interest charge.

This interest (of almost 9% per annum) is calculated daily on a compounding basis and added to your account.

But it’s not all doom and gloom. Here are some tips for how you can manage your tax debt.

Keep in touch

While it’s tempting to ignore repayment notices, delaying action will only lead to increasing pain.

Keep in regular communication with the ATO and respond to any queries promptly to avoid more debt.

Set up a repayment plan

The ATO has an online payment plan calculator where you can calculate affordable repayments.

This calculator can also tell you how quickly you can repay your debt and the interest charged.

Exploring ways to release equity from your home could be another option if you want to quickly clear any unpaid taxes.

Refinancing

While many banks won’t refinance tax debt, some lenders, like Liberty can help.

Talk tax with an adviser

Talk to a Liberty Adviser today about your ATO debt refinancing or consolidation options.