Personal income tax can be hard to deal with. Various factors determine the net payable income tax for any given tax year. There is assessable income to start with. This is followed by permissible deductions and available rebates. However, this depends on individual circumstances or income thresholds.
If left unattended, tax debt snow balls into a major tax liability. This can accrue General Interest Charges on any outstanding tax debt. Individual tax debt is often the bane of many sole traders. If you run a small business, negotiating with the tax office is the last thing you would want to deal with.
Leaving tax debt unattended for too long accrues General Interest Charges. The ATO website refers to this as a common single rate of interest for all tax types, for when payment is not received by the due date. This interest is calculated on a daily compounding basis. It is calculated based on all outstanding amounts accrued from the due date of the debt until it is finalised or paid in full. From a practical perspective, it is often difficult to finalise a tax debt overnight. This is often due to limited income or cash flow issues faced by most individual tax debtors in Australia.
It is essential to understand that a tax debt will not go away overnight or over time. Tax debts and personal debt must be attended to professionally and diligently by those who can appropriately assist you with your tax debt. ATO penalties and interest rates are common components to overdue tax bills. As such, it is imperative to review each ATO document to see how they can be attended to in a timely manner. ATO penalties can accumulate over time, making up a significant portion of your ATO tax debt or personal debt. You should be aware that the ATO holds significant powers to collect this debt, so don’t leave it unaddressed for too long.
At Australian Debt and Insolvency Solutions (ADAIS), we specialise in assisting clients who have either unmanageable tax debts or have left their tax affairs for too long and would like to get them sorted sooner than later. Our team can negotiate on your behalf and bring you some much needed relief to ensure you can continue living stress-free.