Tax debt is a widespread issue, but it can be overcome
`If you're having a tough year financially, you're probably dreading the upcoming tax season. There's nothing more stressful than going back over your finances, picking apart every source of income and handing a sizable percentage of your hard-earned money over to the federal government. This is even true when times are good and you have no trouble paying, but when you're worried that your tax debts are too much, it's doubly difficult.
You might be afraid that you won't be able to come through on your tax bill this year – and if so, you're absolutely not alone. Across Australia, there are thousands of people struggling to complete their payments, accounting for a sizable portion of the nation's economy.
Tax strife can be painful, but there are options for getting through it. Understanding those options can help you carve out a more stable financial future for yourself in the long run.
Tax debts rising across Australia
Accruing tax debt can be a stressful experience for anyone, but it can also be comforting for those battling tax trouble to know that they're not alone. And in Australia, they're extremely far from it. ABC News recently reported that tax debt is a widespread issue nationwide, and in total, the Australian Taxation Office (ATO) is owed more than $35.3 billion by taxpayers.
This figure equates to approximately 2.3 per cent of Australia's total gross domestic product. This puts things into perspective – while Australians as a rule are hardworking, productive people, they're also having a great deal of trouble meeting the tax burden they're collectively facing. Debts owed to the ATO were spread across a number of sectors, including large corporations, small businesses and individual filers.
Bearing in mind what a widespread issue in Australia tax debt has become, it makes perfect sense to reach out and ask for a little tax debt help in a time of need. Tax trouble is becoming an epidemic, and it's wise to search for a cure.
Battling insolvency? Devise a game plan
Often, tax debt trouble is tied to another financial problem – insolvency. You've got a certain level of income and a certain amount of debt, and sometimes it's overwhelmingly difficult to reconcile one number with the other. If you have trouble paying what you owe, it's important to map out a strategy for coming out of your current financial trouble.
This may come in the form of some sort of installment agreement. You may not be able to pay off all your debts at once, but it may be possible to work out an agreement in which you'd pay a little each month or each quarter until, eventually, you're in the clear. Such plans are common for individuals and small businesses who don't have the resources to get out of trouble right away.
If nothing else works, it may be time to admit defeat and enter into liquidation. But that's only a last resort, and it's wise to seek other strategies first.
Assessing your future financial options
If you're not able to pay off your tax debts, you may have to consider a course of action such as voluntary administration, which entails a restructure of your company and may include selling off some of your assets in an effort to pay off the debts you owe.
But at Corporate Lifeline, we understand that often, financial troubles simply boil down to matters of cash flow. As you assess your options, we're here to offer assistance, and a big part of that is helping you understand the income you take in, the debts you owe and how the two interact. Even if your tax debt feels overwhelming, there's probably a way out of trouble, and our job is to help you find it.