Search

Refund tardiness threatens cash flow

THE delay in refunding GST from the first Business Activity Statement to large businesses – who lodged their second BAS late last month – does not augur well for the hundreds of thousands of smaller businesses due to lodge their first BAS on November 11, warns CPA Australia’s senior tax counsel Paul Drum.

“While most of the major companies affected so far will not need to seek finance because of the cash flow squeeze, if these delays continue through to November, smaller businesses will be in a much more precarious situation,” Mr Drum said.

He said it was unfair the interest charged to late taxpayers was substantially higher than the interest the ATO was required to pay taxpayers if its refunds were late – ie 14 days after lodgment of the BAS return.

“The ATO is only required to pay interest at the Treasury note rate, which is currently around 6.25 per cent,” Mr Drum said.

“However, if a taxpayer is late then they are required to pay interest at eight per cent over the prevailing treasury note rate (14.25 per cent).

“Furthermore, if small businesses need to take out finance

because the ATO is late in refunding their GST, the business will probably have to pay interest at a rate closer to 14 per cent to cover its short-term liquidity issues.

“This could result in the loss of thousands of dollars for

small businesses.”

Mr Drum said it was vital that the ATO smoothed out any “teething problems” before November.

“The quantity of quarterly lodgments will be much

greater than the monthly BAS lodgments, and the stakes far higher if the refunds are late,” he said.

“While they are already having to cope with the GST, PAYG and the complications of lodging their BAS on time, late refunds from the ATO could well make the difference between survival or not for many small businesses around Australia.”

Add your comment

BNIQ sponsored byECU School of Business and Law

Students

6th-Australian Institute of Management WA20,000
7th-Murdoch University16,584
8th-South Regional TAFE10,549
9th-Central Regional TAFE10,000
10th-The University of Notre Dame Australia6,708
47 tertiary education & training providers ranked by total number of students in WA

Number of Employees

BNiQ Disclaimer