ATO Debt Focus: Do Not Let BAS and Super Debts Drift

ATO debt is back in the news.

Accountants Daily reported that an audit has pushed for stronger small business debt collection targets. It also reported that directors facing director penalty notices should act early and get advice.

That matters for physio clinic owners.

Most clinics do not get into tax debt because the owner is careless. It often starts slowly. A BAS is paid late. PAYG withholding is held back. Super is left until later. Then rent, wages, and supplier bills keep coming.

The debt grows in the background.

The danger is waiting too long

Tax debt gets harder to fix when you leave it alone.

A small missed BAS may be manageable. Several missed BAS lodgments are a different problem.

The same goes for PAYG withholding and super.

If you employ staff, these amounts are serious. They are linked to wages and staff entitlements. They should not be treated like spare clinic cash.

Watch the early signs

A clinic may be heading for trouble if:

• BAS is lodged late
• PAYG withholding is unpaid
• super is paid late
• wages are paid before tax is set aside
• the ATO payment plan keeps getting pushed out
• the owner uses personal cards to cover clinic bills
• new equipment is bought while old tax debt remains unpaid

One sign on its own may not mean crisis.

But if you see two or three at once, stop and look closely.

Do not hide from the numbers

It is easy to avoid the ATO portal when cash is tight.

Do not do that.

Open the numbers. List what is owed. Split it into clear buckets:

• GST
• PAYG withholding
• income tax
• super
• interest or penalties

Then list the next four weeks of clinic cash coming in and going out.

You need a plain view of the problem before you can fix it.

Be careful with staff amounts

Staff amounts need extra care.

PAYG withholding and super are not the same as a normal supplier bill.

If they are unpaid, the risk can move past the business and land with directors in some cases. Accountants Daily reported this week on director penalty notices and the need to act early.

If your clinic runs through a company and has unpaid staff tax or super, get advice fast.

Have the hard talk early

If the clinic cannot pay everything, speak to your accountant before the next due date.

Do not wait for a final notice.

You may need to:

• lodge even if you cannot pay in full
• set a payment plan
• cut non-essential spending
• pause large equipment buys
• review wages and rosters
• check whether the business model still works

That last point is not fun. But it is better to face it early than after the debt has grown.

A simple weekly habit

Set a weekly tax cash check.

It can take 20 minutes.

Check:

• what BAS or PAYG is due next
• what super must be paid
• what cash is set aside
• what bills are due before the next patient receipts arrive

This habit will not solve every problem. But it can stop small problems from becoming ugly ones.

Tax debt does not improve by being ignored. If your clinic is behind, get the numbers in front of you and ask for help early.

Sources: Accountants Daily, “ATO audit recommends SME debt collection targets”; Accountants Daily, “ATO ‘flavour of the year’: insolvency a strong option for directors facing DPNs”; Accountants Daily, “How accountants can proactively help clients avoid insolvency risks”.