The ATO has recently signaled it’s taking a much firmer stance on compliance—no more leniency, fewer remissions, and tougher consequences for what it deems non-compliance. A well-publicised case involving a $9,000 penalty for a dormant business reinforces this message loud and clear to small-business owners and tax professionals alike.
The Case in Point: Dormant Doesn’t Mean Exempt
Despite no trading activity, the business in question was hit with a hefty $9,000 penalty, which the ATO refused to remit—even when the business argued it posed minimal risk and was not actively generating income. The message was loud and clear: being inactive doesn’t protect you from being penalised—and remissions are no longer a given.
Penalty Remissions Are Shrinking
Gone are the days of easy penalty waivers:
– The ATO is now denying applications more frequently, approving fewer than 70% of remission requests—down sharply from over 90% during the pandemic.
– In the past, even small compliance oversights were often remitted. Now, the ATO explicitly states that “exceptional circumstances” must be demonstrated—and expectations have been raised significantly.
– Interest charges (e.g., General Interest Charge around 10.8%, compounded daily) are now no longer tax-deductible—making non-compliance even costlier.
Why They’re Turning Up the Pressure
– Massive outstanding tax debt (~$50 billion)—with half owed by small and medium businesses. That debt fuels more stringent enforcement.
– Director Penalty Notices (DPNs) and ‘lockdown’ notices are being used aggressively to enforce legacy debts, often from years ago.
– The ATO has made it clear: it now views compliance as a priority, not a courtesy.
What This Means for Your Business
| Risk Area | Implication |
|---|---|
| Historic Lodgments & Dormant Entities | You can’t simply assume oversights will be overlooked. Expect active pursuit—even if your business hasn’t traded in years. |
| Penalty Relief Requests | Don’t rely on remissions. They now require documented exceptional circumstances and are being routinely refused. |
| Carrying ATO Debt | With interest no longer deductible, unpaid amounts compound fast—and may lead to payment plans, garnishee orders, DPNs, or even insolvency. |
Key Takeaways: How to Reinforce Your Tax Defences
- Proactively identify and resolve any outstanding lodgments or debts, even for dormant companies.
- Request remissions early and ensure your circumstances are thoroughly documented—but don’t expect them as a given.
- Closely monitor director obligations, especially PAYG, GST, and superannuation—they’re being tracked relentlessly.
- Consider third-party assistance—accountant or tax specialist support now adds more value than ever.
Bottom Line
The ATO is no longer taking a back seat. Dormant businesses, harmless oversights, historic debts—all are now fair game for enforcement. For small business owners and directors, this means it’s time to get your house in order, act early, and don’t expect leniency. Let me know if you’d like a compliance health-check template or client advisory memo to help your team stay ahead.