The Australian tax system operates under a self-assessment system, which means that it is up to you to ensure that you are meeting your tax obligations. However, even if you do everything right, there are still some things that can happen that can lead to tax debt, such as;

• Not paying your taxes on time
• Making a mistake on your tax return
• Not declaring all of your income
• Not paying the correct amount of tax

No matter the reason, finding yourself with a tax debt can be a stressful and overwhelming experience. The good news is that there are ways to deal with tax debt.

The best way to avoid tax debt is to prevent it from happening in the first place. Here are a few tips on how to do that:

• Manage your cash flow properly. This means tracking your income and expenses carefully and making sure that you have enough money to pay your taxes on time.
• Keep your GST and income tax payments separate from your other finances. This will make it easier to track your tax liability and make sure that you are paying the correct amount.
• Update your business records frequently. This will help you to keep track of your income and expenses, and it will also make it easier to file your tax returns accurately.

If you already have tax debt, there are a number of things you can do to deal with it. Here are a few tips:

Have you considered consolidating your tax debt?

Debt consolidation is the ability to include debts such as tax obligations in a loan product. This is a good option if it has a lower interest rate than the General Interest Rate charged  by the ATO .

You could set up a payment plan through the ATO which allows you to break down your debt into smaller, more manageable payments. If you decide to take this route, it’s important to note, the ATO will charge a General Interest Charge (GIC) on unpaid tax debts. The current GIC rate is 10.90% from July 1st 2023 (compounding daily). This means that the amount of interest you owe will increase over time, even if you are making  payments on your debt.

However at Rate Money, rather than paying 10.90% ATO GIC on your tax debt, we could consolidate your tax debt into a home loan! This will reduce your interest rate and your monthly repayments. In addition, this will free up cash flow for you to invest back into your business.

You will still need to have a good line of credit and make your current home loan repayments on time, as well as have equity for this option.

Ask your lender if you are eligible for cash out!

If you don’t have any ATO debt but want to grow your business, speak to a local Rate Money Branch about cash out for business purposes.

At Rate Money we understand that you need to invest in order to grow, that’s why we offer cash out for business purposes at prime residential rates up to 80% LVR, and all you need is an Accountant’s Declaration!

No matter what your financial situation is, it is always a good idea to consult with an accountant or financial advisor. These professionals can help you understand your options and make the best decisions for your business.

When you are speaking with an accountant or financial advisor, be sure to ask about the following:

1. Are there any new tax rulings coming in that will affect my business?
2. Should I be making purchases now with an automatic tax write-off?
3. Do I need to restructure my business from a sole trader to a company for tax reasons?
4. Or, if already a company, should I look at setting up a trust?
5. Should I set up a self-managed super fund?

At Rate Money we foster strong relationships with financial advisors and accountants across Australia. We can put you in touch with an expert to guide you through your financial situation.

Contact Rate Money today to discover how our services can help drive your business growth. We offer a range of solutions from SMSF, Residential and Commercial Loans and that is only the beginning. Through Rate Money you can optimise your cash flow and pave the way for long-term financial success.