ATO Cracks Down on Small Business Tax Debts: Here’s What You Need to Know

In the wake of the Covid era, the Australian Taxation Office (ATO) adopted a lenient stance toward small businesses with GST, PAYG tax, and income tax obligations. However, the ABC recently reported that this period of leniency has come to a screaming halt and the ATO is now aggressively pursuing small businesses that owe tax debt, implementing stringent debt collection measures and shutting down businesses unable to comply.

The Current Situation

Rob Heferen, the new commissioner of the Australian Taxation Office, recently highlighted the severity of the issue. According to ABC News, small businesses collectively owe the ATO about $24 billion relating to their business activity statements (BAS). Heferen expressed concern over the growing trend of businesses falling behind on these payments, noting, “We are seeing an increasing number of businesses fall behind on these types of payments, from which point it is very difficult for businesses to get back on top of their obligations and remain viable.”

The numbers are alarming. Small businesses account for 65% of all collectable debt owed to the ATO, which amounts to $32.5 billion. Over the past four years, the total collectable debt, from businesses and individuals, has surged from $26.5 billion in June 2019 to $50.2 billion in June 2023 — an 89 percent increase. This sharp rise highlights the escalating pressures on small businesses across the country.

Aggressive Debt Collection

In response to the mounting debt, the ATO has intensified its debt collection efforts. Businesses with unpaid tax debts face the risk of being shut down if they fail to settle their obligations. The ATO’s hardline approach is a stark contrast to the leniency shown during the pandemic, and it serves as a brutal wake-up call for small business owners.

While the ATO is offering payment plans to help businesses manage their tax debts, these plans aren’t a get out of jail card and currently carry a general interest charge of 11.36%. Not only are you paying a high interest rate, these loans also have short repayment terms so your monthly payments can be astronomical. For many, meeting these repayment conditions may prove to be an insurmountable challenge, potentially crippling their operations.

What Can Businesses Do?

We reached out to Antony Resnick, insolvency expert and partner at DVT Group to get his thoughts on what businesses can do if they are burdened by ATO debt. He cautioned not to drown in the sea of debt but to raise your hand and ask for help. Companies that lodge their BASs but do not have the money to pay their bill are far better off from a personal liability standpoint than those who don’t lodge and don’t pay.

One option for businesses is to refinance the ATO debt through private lenders. TrailBlazer Finance is one of the few lenders willing and able to step up to the plate offering refinancing options that allow businesses to spread out repayments over five years, providing much-needed cash flow to continue operating and growing.

Take the First Step Toward Tax Debt Relief

If you’ve got ATO debt to pay don’t ignore it, raise your hand and ask for help.  We understand the pressures small businesses face and are here to help you find a solution that fits your unique situation. We invite you to set up a complimentary call with our experienced team to discuss your specific circumstances and explore how our refinancing options can help you. Reach out to us today at 1300 139 003 to clear the decks and get square with the ATO.

 

Understanding the market dynamics of trail book acquisition costs

Understanding the factors influencing trail book valuations is not just important but pivotal for making well-informed decisions in the acquisition process. These valuations encapsulate a complex interplay of multifaceted variables that can significantly impact the value and viability of an acquisition. Determining the factors influencing trail book valuations is crucial for making informed decisions. TrailBlazer Finance can help you understand the intricacies of trail book pricing across various sectors:

Mortgage Trail Books

Historically, mortgage trail books have traded at multiples ranging from 1.5X to 3X annual trail revenue. However, pricing varies significantly based on the quality of the asset. Just like buying a used car, factors such as client retention, revenue consistency, and asset quality play pivotal roles in determining the price. It’s essential to conduct external valuations to accurately assess the value of the asset being acquired.

Financial Planning Books

The valuation of financial planning books is typically based on a multiple of annualised recurring revenue (CSR), with historical norms around 3X. However, market sophistication has led to variations in pricing based on revenue streams, client base stickiness, and service offerings. Conducting detailed valuations and analysing revenue breakdowns are essential steps in determining the fair price for financial planning books.

Real Estate Rent Rolls

Rent rolls, representing real estate rentals, typically trade within the range of 2.5 to 3.5 times annual revenue. Factors such as client retention, vacancy rates, and rental reliability influence pricing. The focus is primarily on management fees and the quality of underlying properties.

Accounting Practices

Accounting practices are usually valued at 0.8 to 1.2 times annualised revenues, with considerations for achievable EBITDA. Client base stickiness, service availability, and eligibility of potential acquirers significantly impact pricing. Conducting thorough due diligence is essential to accurately assess the potential value of accounting practices.

Navigating trail book acquisitions requires a nuanced understanding of market dynamics and valuation principles

Taking into account elements such as asset quality, revenue streams, and client retention empowers you to make well-informed decisions and negotiate equitable prices. Engaging with experts like TrailBlazer Finance and conducting thorough valuations are indispensable components for a prosperous acquisition journey.

For finance professionals gearing up for an acquisition, our team offers confidential consultations customised to your unique circumstances. Alternatively, immerse yourself in our comprehensive eBook, “Acquisition Ready,” to acquire a deeper comprehension of the acquisition process and arm yourself with invaluable insights for achieving success.

 

Interested in gaining insights into the crucial aspects of a prosperous acquisition? Our comprehensive eBook, “Acquisition Ready: The 10 Things Finance Professionals Must Cover,” meticulously crafted by our specialist funders, offers valuable guidance to navigate the process effectively. Download today.

A comprehensive guide to navigating legal documentation in acquisitions

Embarking on an acquisition journey entails navigating a maze of legal documentation essential for a successful transaction. Let’s delve into the key legal documents required and their significance in the acquisition process:

2nd Level: Reference ability Checks

Delving deeper, it’s essential to scrutinise the character and reputation of the vendors involved. Conducting reference ability checks by reaching out to business development managers, partnership managers, and individuals associated with the target acquisition provides invaluable insights. Identifying any red flags regarding the vendor’s integrity or reputation is crucial, as acquiring an asset tainted by poor character can prove detrimental to your business. TrailBlazer Finance has numerous methodologies to delve deep.

3rd Level: Legal Searches

Lastly, thorough legal searches are indispensable to ensure a seamless acquisition process. These searches encompass verifying ownership, clearing titles, and identifying any encumbrances or outstanding debts associated with the asset. By meticulously conducting these searches, you safeguard against potential legal entanglements that could impede the acquisition’s success.

Although every acquisition journey may unfold with its own set of nuances, certain foundational principles persistently stand firm. With the expert assistance of TrailBlazer Finance, meticulously addressing these aspects of due diligence empowers you with the optimal opportunity for success in your acquisitions endeavours. 

Interested in gaining insights into the crucial aspects of a prosperous acquisition? Our comprehensive eBook, “Acquisition Ready: The 10 Things Finance Professionals Must Cover,” meticulously crafted by our specialist funders, offers valuable guidance to navigate the process effectively. Download today.

How to complete a thorough due diligence when acquiring a business

In the ever-evolving realm of business expansion, acquisitions emerge as powerful drivers of success. They present a thrilling opportunity to instantly double your business, skipping the lengthy process of organic growth. Through acquisitions, you not only achieve increased scale and efficiency but also gain the freedom to delegate day-to-day operations. Furthermore, your margins, purchasing influence, and market share undergo swift enhancement, marking the dawn of a prosperous new era.

However, the road to successful acquisitions is paved with layers of due diligence. Successful acquisitions hinge on meticulous due diligence across asset valuation, reference ability checks, and legal searches. By prioritising these critical steps and leveraging the expertise of TrailBlazer Finance, you pave the way for transformative growth and prosperity in your business ventures.

1st Level: Asset Valuation Due Diligence

At the outset, it’s imperative to conduct due diligence on the true value of the asset you’re acquiring. Engaging a third-party expert to perform a detailed valuation ensures accuracy and transparency in assessing the asset’s worth and its potential for leveraging. While some may possess the expertise and resources to undertake this task internally, most opt for the objectivity and proficiency offered by external valuers.

2nd Level: Reference ability Checks

Delving deeper, it’s essential to scrutinise the character and reputation of the vendors involved. Conducting reference ability checks by reaching out to business development managers, partnership managers, and individuals associated with the target acquisition provides invaluable insights. Identifying any red flags regarding the vendor’s integrity or reputation is crucial, as acquiring an asset tainted by poor character can prove detrimental to your business. TrailBlazer Finance has numerous methodologies to delve deep.

3rd Level: Legal Searches

Lastly, thorough legal searches are indispensable to ensure a seamless acquisition process. These searches encompass verifying ownership, clearing titles, and identifying any encumbrances or outstanding debts associated with the asset. By meticulously conducting these searches, you safeguard against potential legal entanglements that could impede the acquisition’s success.

Although every acquisition journey may unfold with its own set of nuances, certain foundational principles persistently stand firm. With the expert assistance of TrailBlazer Finance, meticulously addressing these aspects of due diligence empowers you with the optimal opportunity for success in your acquisitions endeavours. 

Interested in gaining insights into the crucial aspects of a prosperous acquisition? Our comprehensive eBook, “Acquisition Ready: The 10 Things Finance Professionals Must Cover,” meticulously crafted by our specialist funders, offers valuable guidance to navigate the process effectively. Download today.

Navigating the Approval Process in Acquisitions

A successful acquisition has the potential to transform your business, offering immediate scalability, improved efficiency, and the ability to delegate day-to-day operations. Moreover, it can result in instant enhancements in margins, purchasing power, and market share, propelling your business towards unprecedented success.

However, when venturing into the world of acquisitions, understanding the intricacies of the approval process is paramount. Before proceeding with an acquisition, thorough familiarisation with all relevant legal documentation outlining future payment rights is essential. Let’s delve into what you need to know:

Aggregator, Dealer Group, or Franchise Approval

In the acquisition landscape, securing approval from your aggregator, dealer group, or franchise is often a prerequisite. This step is vital as it grants you the legal right to take ownership of the acquisition target. However, it’s essential to note that approval procedures can vary significantly depending on the entity involved. Trailblazer Finance can guide you through this process. 

Restricted Approval

Approval may come with certain constraints. For example, some aggregators restrict acquisitions to their existing members, while specific mortgage managers may impose prerequisites such as specific guarantees and qualifications. Similarly, franchises typically require acquirers to become franchisees to access acquisition opportunities.

Failing to obtain the necessary approvals poses a significant risk, potentially resulting in the nullification of the acquisition and the loss of deposits or payments made.

Poorly executed acquisitions can spell disaster. Inadequate preparation and due diligence can devalue both the acquired asset and your existing business. Compliance issues further exacerbate the risks, potentially causing irreparable damage.

At Trailblazer Finance, we specialise in guiding clients through the acquisition process, ensuring optimal outcomes every step of the way. From conducting due diligence to negotiating agreements and securing financing, we provide comprehensive solutions tailored to your unique needs. With our expertise by your side, you can navigate the complexities of acquisitions with confidence and achieve your business objectives. Trust Trailblazer Finance to be your partner in success.

Eager to gain in-depth insights into the crucial elements of a successful acquisition? Download our comprehensive eBook, “Acquisition Ready: The 10 Things Finance Professionals Must Cover,” crafted by our specialist funders.

AFG establishes new outsourced trail book marketplace for brokers

AFG has announced a new outsourced trail book marketplace for brokers through an arrangement with specialist cashflow lender and Mergers & Acquisitions advisory firm, TrailBlazer Finance.

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Stinking hot with storm clouds on the horizon

Are you equipped to weather all seasons in 2021?

Congratulations – you survived the Covid-19 flash storm that engulfed 2020! But before the uncertainty and turbulence of 2020 dwindle into the recesses of our collective memory, stop to ask yourself what does the rest of 2021 hold for the mortgage and finance brokerage industry?

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AFG adds specialist lender, TrailBlazer Finance, to lender panel

The aggregation group has appointed a specialist lender, TrailBlazer Finance, to its asset finance panel, making more products available to its broker members.

Australian Finance Group (AFG) has welcomed trail book lender TrailBlazer Finance to its asset finance lender panel.

The addition will provide AFG brokers and their white-collar clients with access to the lender’s funding products and advice, which is specifically created for those with recurring revenue streams, such as brokers, financial planners, accountants, real estate managers and other cash flow businesses.

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The Balloon Booster: Our new low repayment loan for brokers and planners

We recently launched a new low repayment loan for mortgage brokers and financial planners. Designed to boost cashflow, the Balloon Booster is structured like a balloon loan and features lower monthly repayments and flexible end-of-term refinancing options, allowing the balloon to be paid out or refinanced into a two-year loan.

Importantly, the loan product allows brokers and planners to better manage cashflow and maximise working capital at a time when many small businesses are struggling with their short-term cashflow needs.

Jeff Zulman, Managing Director of TrailBlazer Finance commented, “We know from talking to our clients that right now many brokers and planners need a short-term cash boost to free up working capital as they navigate the evolving post-COVID-19 market.

The Balloon Booster is designed specifically for this purpose. It is a low repayment product, with repayments 50 per cent or lower than those of our standard loan product. This helps our SME clients manage cashflow when they need it most.

The new loan product further strengthens the specialist lender’s offering to its broker and planning clients, with Mr Zulman adding, “TrailBlazer Finance is committed to delivering the best possible solutions for these white-collar professionals. We are proud to be able to provide a product which is tailored to the needs of our clients, and the industry more broadly at a time when others are tightening their credit criteria and raising rates.

Seven drivers of trail book value

Understanding the drivers and what they mean for your brokerage

For the mortgage broking fraternity, like most industries, 2020 continues to present a litany of challenges that colour the future with a particular shade of uncertainty that appeals to only the most hardened opportunists.

If we get down to it, how are the smartest and most adaptable mortgage brokerages adjusting to the myriad challenges being presented? And where are the opportunities to turn these challenges into upside and create additional value in your business?

Navigating the valley of death

One thing we have learnt from businesses who have teetered on the precipice and successfully navigated through the valley of death and out the other side, is they often emerged far stronger – and done so by embracing change not just once, but again and again.  Think Lego, Apple, Disney and Amazon. Each has used setbacks as catalysts for innovation, reinvention and disruption.

Mortgage brokers have also had to overcome their share of market shifting adversity over the last decade – be it threats to trail, regulation cuts, a Royal Commission and an ever-heavier compliance and educational burden. So those that are still standing have already had their resolve tested and proven their resilience. COVID-fuelled recession is just another round of fire, albeit an unprecedentedly heavy one.

Where is the value?

So far, we have not seen any notable negative impact on the value of trail book and mortgage brokerages from the current COVID-19 market maelstrom. But there has been a clear split in the pack with an increase in brokers leaving the industry. As a result, we’ve seen an uptick in stronger brokers approaching us for larger loans to fund book purchases as they sniff out opportunities.

We have identified seven drivers of trail book value and what you need to look at when buying a book or preparing your own business for sale at the optimal value:

1. Seasoning. This is the length of time individual loans have been on the book. The longer they’ve been in your book, the higher the value.

2. Underlying run off. This looks at how quickly the book is losing loans. Focus on embedding those relationships.

3. Arrears and clawbacks. Frequency with which clients slip into arrears or loans are clawed back. A potential challenge in the current market.

4. Growth in underlying loans. Growth in the number and value of those loans. Hold tight to the loans you do have.

5. Growth in trail. A growing trail book is a valuable asset, particularly in a time of uncertainty. Tap into gaps in the market.

6. Not all loans are equally valuable. A properly structured investment loan, for example, could be a more valuable asset than a residential loan. Write loans where you haven’t previously.

7. Underlying spread of lenders, borrowers and products. Focus on the mix and diversity. Concentration risk is a negative.

And a dollop of better, smarter, faster will not go astray

Innovation is not necessarily about scrum masters and setting the world on fire. It can be as simple as getting the basics right. If you look hard enough, there are quick wins out there both from a resilience and value-building perspective. Check out our five tips to help prepare your business for what comes after COVID-19.

Take two minutes to get a sense of your trail book value

Check out our free trail book valuation calculator to get a sense of the value range for your trail book today.

You can also download our valuations flyer for further information.

Whether you’re a mortgage broker, financial planner, rent roll business owner, accountant or other cashflow business, we can understand and support your specific business goals and needs.

Contact us

Suite 401, Level 4,
59-75 Grafton Street,
Bondi Junction NSW 2022

1300 139 003

info@trailblazerfinance.com.au

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