Support to small businesses and sole traders experiencing vulnerability
With over 2.5 million small businesses throughout Australia, the National Tax Clinic program continues to offer services and support to small business owners and sole traders experiencing vulnerability who struggle to meet their taxation obligations. Whether it is due to a lack of support at start-up, uncertainty where to find education, training or knowledge bases, small business owners need ongoing support to navigate the economic landscape. There have been countless taxpayers who are encouraged to commence their own business with a goal to do what they love and deliver services with a desire to share their passion. However, not realising the obligations regarding taxation and the accountability that goes with business ownership, leads to harsh realities.
Whether it is not knowing the goods and services tax (GST) registration requirements and lodgment obligations, not understanding the need to set aside funds from revenue to meet income tax liabilities; not meeting the regulatory requirements for employing staff; these may all lead to a downfall for the dream business. It is noted that there is government funding to support creditor assistance, mental health and financial wellbeing of small business owners, along with payment times reporting. This reflects some challenges faced such as financial literacy, computer literacy and limited education regarding business ownership, leading to degradation of mental health and financial wellbeing.
Meeting taxpayers with no email address or capacity to use a computer, and yet, own and run a business without realising the communications accessed from myGov and the ATO are pivotal in keeping up to date with lodgments of activity statements and income tax. Outstanding tax obligations, pay as you go (PAYG) instalments raised and interest being incurred lead to debt that, once discovered, can break the business owner and lead to the demise of their business. Historical outstanding lodgments are also a challenge to meet and provide accurate and correct data. One example is a tradesman with over 30 years of outstanding tax returns. Once finalised, this ended in bankruptcy at 82 years old.
Due to lack of engagement with the ATO, the outcome is often beyond the ability of the taxpayer to address. Overwhelming debt leads to other issues such as family breakdowns, detrimental health impacts, both mental and physical, potential addiction to endure or mask the problems, and uncertainty for the future. Suicidal ideations become a very real and ongoing issue for affected taxpayers. Once an Australian business number (ABN) has been applied for, it would be beneficial if there was immediate and ongoing outreach to applicants to ensure they are aware of the reporting and taxation obligations.
During 2025, the National Tax Clinic program supported 749 small business entities, a year-on-year increase from 626 in 2024. The lodgment of outstanding business activity statements (BAS) was substantial with 1,951 historical lodgments in 2025, as opposed to 314 in 2024. This is reflective of small business needs for ongoing education and support. There is an increase of outstanding PAYG instalments to which taxpayers are unaware due to the lack of engagement and communication between themselves and the ATO. With additional fines, penalties and charges, these debts are ever-growing and for the unaware taxpayer, insurmountable.
The National Tax Clinic program continues to fill the need in society for small business entities who are unrepresented and unable to meet these requirements.
Case study: small business client
A sole trader seeking assistance from the tax clinic was going through a divorce and had experienced domestic violence. The client’s husband maintained full control over the business’s ABN and associated bank accounts, including funds that were originally set aside for tax obligations. As a result, the client had no access to or authority over the business finances.
The client previously engaged a registered tax agent to prepare and lodge her business tax returns but was dissatisfied with the accuracy and transparency of those returns. She now wished to amend prior year returns independently. However, amendments for small businesses are generally restricted to a 2-year period (extended to 4 years from the date of their tax return assessment for the 2024-25 and later income years).
For earlier returns outside this timeframe, the client would need to pursue the formal objection process or seek ATO approval to make changes.
The client was supported by a tax clinic and appropriate steps to address prior-year returns were undertaken.
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Feedback from a taxpayer
Feedback from a taxpayer who used the tax clinic services to lodge 2 years outstanding income tax inclusive of business income included:
'Thank you so much for assisting me with lodging my tax returns. I truly appreciate the time and care you took to make the process feel manageable. Please also extend my thanks to [the students] for sitting in. Their presence, along with your kindness, really put me at ease under the circumstances. I'm especially grateful for you showing me an easier way to record my information in Excel – it will save me a huge amount of time going forward. Thank you again for your support and compassion.’
End of example