One million Aussies face a $13,000 ATO penalty

One million Aussies face a $13,000 ATO penalty

It’s feared nearly a million Aussies could be fined $13,200 by the Australian Taxation Office (ATO) if they forget – or avoid – a simple act.

Australian business leaders have just a few days to apply for a Business ID through the ATO Australian Business Registry Services (ABRS).

Each of Australia’s estimated 2.5 million business leaders will need the unique 15-digit identifier by November 30 to avoid the fine. According to the ATO, more than 1.4 million directors have already applied for their director ID, but around a million have not.

Directors can apply on the ABRS website using their myGovID and will be given a new number immediately.

The unique identifier ensures that businesses are run by real people by being connected to their MyGov account and also allows the system to detect unusual occurrences such as: B. to mark a possible Phoenix operation.

A phoenix operation is when a company intentionally goes into liquidation and then starts over under a different name, essentially rising from the ashes like a mythical phoenix to eliminate its debt.

This illegal practice directly costs the economy between $2.85 billion and $5.13 billion a year, according to a 2018 report commissioned by the Australian Taxation Office.

According to industry experts, an estimated one in ten collapsed companies is part of an illegal Phoenix operation.

But in the last fiscal year, while the government received more than 2,115 leads on suspected illegal Phoenix activities, only five cases were successfully referred to law enforcement, according to the ATO.

ABRS’ Karen Foat encouraged the stragglers to get moving.

“With the November 30th deadline fast approaching, we are delighted that so many directors are receiving their director IDs and we encourage all other directors to follow suit,” she said.

“Some people may not even know they are a director of a company.

“You don’t have to wear a suit or work in an office to be considered a director. If you run a small business, a self-managed super fund, a non-profit organization, or even a large sports club, you may be a director, which means you need a director’s badge.”

Ms. Foat explained some of the myths surrounding Director ID and hoped some clarification would help businesses and individuals avoid getting stung.

“There is a common myth that a registered tax advisor can simply apply for a director ID on your behalf, but that is not true.

“All company leaders have to apply for it themselves as they have to verify their identity themselves.

According to Ms. Foat, the IDs help regulators create a level playing field for “honest businesses.”

“This robust identification process will help prevent the use of false and fraudulent director identities,” she explained.

“Director ID helps the government take action against illegal activities, such as a practice called phoenix activity.

“This is really shady behavior where business owners illegally shut down their business and transfer assets to a new business to avoid paying their debts to employees and suppliers.

“By applying for a director’s badge, you’re helping protect the community from those doing the wrong thing.”

Australian Restructuring Insolvency and Turnaround Association (ARITA) CEO John Winter previously told that the current economic circumstances are ideal for dodgy Phoenix operators.

“The environment is the perfect storm for Phoenix right now, especially in construction, their margins have been wiped out. Desperate people will do desperate things. The likelihood of Phoenix – we haven’t seen circumstances like this in a long time,” he said.

“It’s been there for so long. It happened to my parents in 1974, they lost everything to a dodgy phoenix builder, the fact that this still happens is a sad indictment.”

He added that it was “inexcusable,” but hoped the new rules for identifying directors would make it harder to get away with.

Michael Carrafa, managing director of bankruptcy firm SV Partners, estimates that one in ten company failures is currently the result of illegal Phoenix operators.

“Right now it might be one in ten, probably many more in 2018. It probably slowed it down a bit, but it (Phoenixing) will come back. Always does,” he told earlier this month.

“We have a huge backlog of zombie companies that defaulted well before the pandemic hit (and) some may have collected government stimulus payments (but) there will be a huge influx of bankruptcies as a result.”

Who needs a Director ID?

You do this when you are a director of:

• Company

• Charity or non-profit organization that is an Aboriginal and Torres Strait Islander corporation or corporation

• A registered Australian entity, for example an incorporated association registered with the Australian Securities and Investments Commission (ASIC) trading outside the state or territory in which it is incorporated

• Foreign company registered with ASIC doing business in Australia (regardless of where you live)

• Corporate trustee, such as a self-managed super fund.

Read related topics:tax time

#million #Aussies #face #ATO #penalty

Leave a Comment

Your email address will not be published. Required fields are marked *