The Australian Taxation Office is urging businesses to properly manage their tax debt, following its application to wind up South Australian franchise Jim’s Plumbing after it failed to comply with a taxation-related demand.
Jim’s Plumbing was set up in 1989 and is one of several trade-based franchises under the Jim’s Group banner of entrepreneur Jim Penman.
Sign up for SmartCompany newsletter.
Free to your inbox every weekday
Late last week, Penman confirmed Jim’s Plumbing has received a wind-up order from the ATO, although he says he does not have an interest in the business.
The ATO’s solicitor, Ben Williams of Hunt & Hunt, says the notice originates from a failure to comply with a taxation-related demand.
While Williams refused to comment any further on the case, an ATO spokesperson says companies need to remain vigilant with regard to managing their tax debt.
“The simplest way for you to manage your tax is to pay on time… It is important you lodge your activity statements and tax returns on time, even if you are unable to pay by the due date,” the spokesperson said in a statement.
“You’ll avoid a failure-to-lodge-on-time penalty and show us that you’re aware of your obligations. We will also use any credits or refunds due to you to help pay off your debt.”
He said if you don’t pay your tax on time, general interest charge will accrue from the due date until the amount is paid in full.
“If you owe tax, or are finding it hard to pay on time, it is important to contact us early on. We will work with you to solve the problem, often by making an arrangement to pay by installments,” he said.
“If you are experiencing serious hardship, you can apply for release from payment of some or all of your tax liabilities.”
But if you make a payment with the ATO and don’t keep to it, or ignore your payment obligations, the Tax Office may issue a garnishee notice (which allows tax debts to be taken from a company’s bank accounts) or enforce director penalties.
“We may also move into a range of legal options, including wind-up and bankruptcy proceedings,” the spokesperson said.
With regard to Jim’s Plumbing, a hearing has been set for July 20 in the Adelaide Federal Court.
Earlier today, Penman said a potential buyer is waiting to pick up the Jim’s Plumbing if the wind-up notice initiated by the ATO is successful, but says he believes the owners of Jim’s Plumbing can pay the debt.
The size of the tax debt is unknown.