Tough Time Strategies

With the economy slowing and growth stagnant, this article offers business owners and individuals some ideas for financial relief. 


From time-to-time, all businesses are in debt with the ATO. Consider entering into an ATO payment arrangement if your business is. The ATO offers flexible arrangements which allow you to pay off your debt in amounts that are affordable and won’t unduly impact your cash flow or cash reserves. Where you enter into such an arrangement, the general interest charge will still be levied on any amounts outstanding after the due date. To enter into an arrangement, you our your advisor can phone the ATO. 


Almost all business owners have outstanding loans. Some business loans and many home loans have an interest-only option which reduces your repayments as you only pay the interest portion of your loan for a set period. Revisit the terms of your loan agreement to see if you have this facility, some financiers will allow you to pay interest-only on application when you or your business is struggling financially. 

If your business is less profitable this year than last year, then you should consider varying your PAYG instalments downwards. 

PAYG instalments are effectively prepayments towards your expected end of year tax liability. The amount of instalments you are required to pay is generally based on your income from the prvious year. The instalment amounts are provided to you by the ATO as either an instament rate (which you then multiply by your income) or a fixed dollar amount. Because the amounts and rates are based on your income from a prior year, you should consider varying the PAYG instalment dollar amount downwards if your current year turnover is trending less than last year. By doing so, it may provide your business with significant short-term relief.

In making a downwards variation, be aware that penalties may apply if your variation resutls in you paying an amount that is less than 85% of the actual tax payable on your business and investment income for the financial year. Therefore, before you make a variation, consult your advisor. 

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