In recent months, there has been increased attention on the growing tax debt owed by small businesses across Australia. In response, the Australian Taxation Office (ATO) has taken a more aggressive stance in debt collection efforts. This has included persistent phone calls to tax agents, letters to taxpayers, and an uptick in businesses seeing their debts reported to credit reporting agencies or receiving director penalty notices. Moreover, there’s been a noticeable shift in ATO policy concerning the remission of penalties and interest charges on late lodgement and tax payments, with far fewer remissions being granted compared to previous years.

These developments are already making the financial landscape increasingly challenging for business owners. However, a new proposal from the Federal Government threatens to add further pressure: the removal of tax deductibility on general interest charges (GIC) imposed by the ATO on tax debts.

If this proposal is passed, businesses will no longer be able to claim GIC as a tax deduction. This change could force many to seek external financing, with some potentially turning to unsecured loans on less favorable terms—decisions made out of necessity rather than sound financial strategy.

The importance of seeking professional financial advice has never been more critical. At Elysium, we have the experience and industry connections to guide your business through these difficult times. Whether you’re looking for better financing options or considering a business restructure—such as the Small Business Restructuring process—our team is here to help.

The earlier you seek advice, the more options you’ll have to secure a positive outcome for your business. If you’re concerned about the proposed changes or need assistance managing tax debts, don’t hesitate to reach out to us.