About the study
Money sought to understand how the current recession would impact the ability of Australian businesses to meet their tax obligations. It conducted a survey of 261 Australian businesses – 88% of which are SMEs – to ascertain how businesses paid their BAS and taxes before the 2020 pandemic.
The survey asked business owners whether they pay their tax obligations in cash, whether they have ever gone on a payment plan with the ATO, taken out a business loan, or paid via credit card to get by, and how many times they have had to do this.
Money surveyed businesses across a range of sizes: SMEs (1-200 employees) and large (more than 200 employees), and across each state.
How did businesses pay their GST and tax obligations last year?
The results reveal that 25% of businesses overall – and 21% of SMEs – were unable to pay their GST and tax in cash, in full, in 2019. Among these businesses, 64% – and 83% of SMEs – mostly paid it through a repayment plan with the ATO or on a credit card. 65% went on a payment plan or paid via credit card at least twice in 2019, and 16% did so every time.
Looking across the different organisation sizes, among who did not pay their full tax obligations in cash every time, a staggering 57% of large organisations had to secure financing to make their payments at least once in 2019, compared with 9% of SMEs.
How often did businesses go on payment plans with the ATO, pay with a credit card or take out a loan?
Among businesses that had to go on a payment plan or use credit, 65% did so at least twice in 2019. Between business sizes, 83% of large organisations and 70% of SMEs did so. 16% of businesses paid via payment plan or credit every time.
Between business sizes, 33% of large organisations, 25% medium businesses and 13% of small businesses did so every time.
Why are businesses struggling with their tax and GST payments?
77% businesses cited cash flow issues as the major reason they were required to go on payment plans with the ATO or make payments via credit (e.g. a tax debt loan).
For 43% of businesses overall and 29% of SMEs, cash flow issues stem from long-outstanding customer or client payments. A further 21% said insufficient cash flow arose because the business spent beyond its means.
If a business does not engage with the ATO in relation to its tax debt, the ATO may disclose the debt to credit reporting bureaus, which could have an impact on the business owner's credit report.
