Large ATO debt... Can I use some Equity?

I'm wondering about a strategy to pay of some of the debt via a credit card and then transfering that amount to 0% credit card over 16 months? Is this even feasable?

I will be going via my accountant to work out a plan but wondered if anyone has thoughts on this??
 
Sure it will come at a price but do you have any ability to engage with KPMG based on any documentation prepared by them that you have relied upon?

It's always a danger when contracting that you can prove that you are a bonafide contractor and not part of an elaborate scheme to avoid paying statutory entitlements & employer obligations ie payroll & PAYG tax, super, workers compensation holiday leave, sickies, RDOs, long service etc.

They will apply a control test (could you outsource your work to others? Were you doing work for other (not related) companies or was this your sole provider? (if you have other similar contracts or simultaneous contracts all the better).

Hi Scott,

I had to go through these management companies due to the fact that the larger institutions I work with no longer allow for direct relationships for contracting. You have to go through a 'prefered supplier' and to get on that list cost a lot of money. It was more cost effective to go via a management company. They never found me work but set up my structures and handled my bookwork, tax returns etc.

A lot of my contracts have either been over a 12 month period or start out as six month and then get extended as the projects drag on. I don't really have multiple contract at a time as the main ones are quite large and require full engagement.

The hard thing to accept is that no other entity see's me as an employee. Certainly not the companies I contract to as I'm not entitled to sick pay, holiday pay. long service or super. The banks also treat me as self emplyed as do insurance agencies. It seems the only ones to say i'm an employee are the ATO.

It's a real no win situation and doesn't seem fair. (but lifes not is it?) I'm an IT guy so relied on the info from business and tax professionals however now the ATO have stung me!
 
hi maadha,

i am in the same line of business of you, but i have a lot of customer.

your management/agency should tell you that you are actually an employer, but on a contract basis, because it specified already on the ato website. if you are working for 1 customer, then they are your employer, and they should pay all of your super etc.

now they are wind up as well. dont know how are you going to pursue that.

your accountant should pick it up that you are actually an employer, not a contractor.

Hi Scott,

I had to go through these management companies due to the fact that the larger institutions I work with no longer allow for direct relationships for contracting. You have to go through a 'prefered supplier' and to get on that list cost a lot of money. It was more cost effective to go via a management company. They never found me work but set up my structures and handled my bookwork, tax returns etc.

A lot of my contracts have either been over a 12 month period or start out as six month and then get extended as the projects drag on. I don't really have multiple contract at a time as the main ones are quite large and require full engagement.

The hard thing to accept is that no other entity see's me as an employee. Certainly not the companies I contract to as I'm not entitled to sick pay, holiday pay. long service or super. The banks also treat me as self emplyed as do insurance agencies. It seems the only ones to say i'm an employee are the ATO.

It's a real no win situation and doesn't seem fair. (but lifes not is it?) I'm an IT guy so relied on the info from business and tax professionals however now the ATO have stung me!
 
Interest rate is a general penalty rate as determined by the ATO. I can't remember the figures.

There may be different rules as to deductibility. I seem to remember I would have been better off tax wise by taking the ATO option- but that was some years ago. Get advice.

The GIC is deductible and the rate is 9.69% compounded daily (10.17%pa if my maths is right) BUT BUT BUT..
The ATO will report to Dun & Bradstreet who do enter debts into credit score records. They will hound you. The ATO can also initiate default collection action without reminder. GIC arrangements for a large debt like $90K aren't often given. Short term yes.
 
I'm wondering about a strategy to pay of some of the debt via a credit card and then transfering that amount to 0% credit card over 16 months? Is this even feasable?

I will be going via my accountant to work out a plan but wondered if anyone has thoughts on this??

Yes might work.
 
The general interest charge is currently 9.69%

IF and i say IF this is the interest charge,go the equity route,don't use a CC.

Btw long88,interesting devo going on on the cnr of bucks and noble.

Railway underpass is coming.Pity they don't bull doze down the old shops...Though i can see it happening in the future.
 
Even if your agency had a private ruling, you could not have relied upon it. Not even if they made representations to you.

If you think that the ATO has exercised any powers or discretions unfairly (e.g. failed to take into accounts your attempts to comply) then you might try contacting the Ombudsman initially.
 
Does anyone know of Accountants or tax lawyers specialising in this area? While my accountant is working with the ATO at the moment I wouldn't mind some 2nd opinions.

If I'd have got a 2nd opinion 5 years ago I may not be in this mess!

Thanks again for all the replies.
 
Does anyone know of Accountants or tax lawyers specialising in this area? While my accountant is working with the ATO at the moment I wouldn't mind some 2nd opinions.

If I'd have got a 2nd opinion 5 years ago I may not be in this mess!

Thanks again for all the replies.

I am sure your Accountant is very competent, however they may be more interested in covering themselves than pursuing the best outcome for you.

A good specialist lawyer in tax administration will be expensive, however given the size of the shortfall and penalties then any remission percentage they can negotiate will be quite material.
 
Thanks for the feedback.
Can anyone PM me a recommendation for a broker that may be able to assist with this financial hurdle I'm trying to jump?

Cheers
 
As the ATO seems to have rejected claims for expenses, it might be worth getting a second opinion from an accountant specialising in taxation of contractors/PSI in relation to those expenses. As Rob has pointed out your current accountant is probably in a position where they have a conflict of interest.
 
Thanks for the feedback.
Can anyone PM me a recommendation for a broker that may be able to assist with this financial hurdle I'm trying to jump?

Cheers

How did you go with the legal route Maadha?

Re: The ATO, yep, they seem to be big on "sham contracting". The Building and Construction Industry seems to be up there with IT/IS
 
Best to approach ATO to pay debt in installments. As long as you pay debt as agreed by both parties, you shouldn't have any trouble.


if they don't let you pay debt in installment, there is always an option to go to court. I am sure judge will look at your financial hardship (selling PPOR to pay to ATO)

Also, dont be afraid to take the matter to court, you can represent yourself. just stay strong and you will get there.
 
Best to approach ATO to pay debt in installments. As long as you pay debt as agreed by both parties, you shouldn't have any trouble.
if they don't let you pay debt in installment, there is always an option to go to court. I am sure judge will look at your financial hardship (selling PPOR to pay to ATO)
Also, dont be afraid to take the matter to court, you can represent yourself. just stay strong and you will get there.

My 2c....
You really will be bankrupt if you do this in court....ATO has huge resources and will kill you with legal costs.

Negotiate hard with the (false) assumption that what you were doing was legitimate.
Ask for concessions......they can only say no.....

Finally - all these experts are fine until their is a problem...like right now...and where are they to help you?
Always, always double check an opinion - especially about tax matters as it happens afterwards, not before you make changes.

You will recover and progress and get smarter at making money.....learn from the mistake.
Change your business structure to protect your assets and make sure you know if you are an employee or a contractor.
Good luck.

p.s. hate the ATO...far, far too much power in the hands of low salary government workers.
 
Sorry to read that this has happened to you maadha. It's pretty bad when you didn't get sick leave, annual leave and super but then get taxed as an employee. I think your idea to get a second opinion is a good idea. If you end up needing to take out a loan against your house, you could ask your finance broker to set up a separate split so that your loan is not a mixed purpose loan where it becomes difficult to calculate the deductible and non-deductible interest.
 
Maadha,

Whilst i was searching forums to assist with my financial predicaments with ATO, i bumped onto your posts in this forum that i all possible ways reflects our situation. i can certainly understand your situation with ATO as we are very much in the same boat with over $92 k debt. You seem to have gone through all the efforts and thoughts that we are currently working on. i'm very keen to learn about your current situation and any luck with clearing / reducing your ATO debt.

Appreciative if you could help.
 
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