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The ATO is debt collecting again – and now’s the time to take action. But rather than enter into an ATO repayment plan, have you considered simplified debt restructuring?
Simplified debt restructuring vs ATO repayment plan
14 October 2010
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3 minute read
The ATO is debt collecting again – and now’s the time to take action. But rather than enter into an ATO repayment plan, have you considered simplified debt restructuring? The Small Business Restructuring Process (SBRP), which commenced in early 2021, enables eligible*, financially distressed small businesses to restructure their debts while remaining in control of their business. Put simply, it ‘buys’ time to recover.
Since 1984, Jirsch Sutherland has worked with thousands of small businesses to help them restructure and recover. Our team of 15 Registered Liquidators around the country – all with vast experience and proven expertise – understand the SBRP and work closely with accountants, directors and other advisers to develop viable solutions. We:
- collaborate with directors to develop a workable SBRP.
- ensure the SBRP stays on schedule – vital, given you have just 20 business days to prepare a viable plan.
- actively engage with your creditor group to ensure that your plan is explained and understood, giving it the best chance of being accepted.
- provide operational insights to address any underlying issues that may need correcting.
Disadvantages of ATO repayment plans
“An alternative to the simplified debt restructuring process is an ATO repayment plan,” explains Jirsch Sutherland Partner Andrew Spring. “However, that fails to address the reasons why a business is in financial distress and/or struggling to recover from the impact of the pandemic. So, even with a repayment plan, a business can become insolvent and end up with a higher tax debt, because the general interest charge (GIC) will accrue until the debt is paid.
“The Small Business Restructuring Process can be a very practical option. It’s designed to be shorter and it’s less regulated than Voluntary Administration. And there are other significant benefits to having a restructuring practitioner act as a sounding board for directors and management.”
Small Business Restructuring: the benefits
- debtor-in-possession: directors stay in control of their business during the process
- creditor moratorium prohibits creditors, including the ATO, from taking action to recover money or property
- protection: directors are protected from being liable for insolvent trading and from personally repaying the entire company tax debt
- lower costs: the process is designed to reduce access costs for small business
- specialist practitioners: a qualified Small Business Restructure Practitioner manages the process, ensuring compliance and helping protect directors.
Want to discuss the Small Business Restructuring Process or explore other options? Call Jirsch Sutherland now on 1300 547 724 or email
*The Small Business Restructuring Process is accessible to incorporated businesses with liabilities of less than $1 million. To be able to propose a deal the business must have paid all employee entitlements and made all tax lodgements.
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