Small business tax liabilities deferred

The principle that taxpayers with debts to the Australian Taxation Office have to pay interest on the debt they owe won't apply so rigorously over the next year.

Michael D'Ascenzo, Commissioner of Taxation, at a speech to a small business summit in Melbourne yesterday said that businesses with a tax debt and that also have a payment plan with the tax office will have the interest "remitted" over the 2010 financial year.

On current form a little more than a quarter of delinquent business taxpayers may benefit from this largesse.

D'Ascenzo said that, as at April 2009, the ATO had almost 200,000 debt cases under arrangement, worth over $2.5 billion. He said this represented an increase of seven per cent in the number of debt cases under arrangement.

The tax commissioner also said the ATO would reduce factors used to project tax payments for more businesses, which will provide a degree of relief compared with cash flow planning for compliant businesses.