Business viability assessment tool
You can use this tool to help you determine whether a business is viable.
The assessment considers a range of information that is linked to the financial performance and position of the business. This includes the business’s ability to pay its outstanding debts, while meeting its ongoing commitments to creditors.
What is viability?
Viability is defined as the ability to survive. In a business sense, that ability to survive is ultimately linked to financial performance and position.
A business is viable where either:
- it is returning a profit that is sufficient to provide a return to the business owner while also meeting its commitments to business creditors
- it has sufficient cash resources to sustain itself through a period when it is not returning a profit.
If, as a result of using the tool, you have any concerns in relation to your business viability, you should seek specific advice.
To use the tool:- please visit https://expertsystems.ato.gov.au/scripts/net/BVAT/Homepage.aspx?Task=a271e7df-249a-4616-a22b-d5c03b28527c&NavGraph=Home&View=HomeView&PID=68&ms=Businesses
Tax officials will use a new assessment tool to identify businesses that are not viable, singling them out for tougher action as the tax office seeks to recover a $15 billion debt.
Speaking at a small business summit yesterday, Commissioner of Taxation Michael D’Ascenzo said the Australian Taxation Office will continue to empathise with businesses facing genuine financial problems.
However, with debt ballooning in the economic downturn – by 12% in 2009 and 21% in 2010 – the ATO has been left with no choice but to chase the debt of businesses that are not viable.
“To ensure a fair and consistent approach to assessing business viability, we have developed an assessment tool to maximise a rigorous evidence-based approach,” D’Ascenzo said in his speech.
D’Ascenzo said the tool operates similarly to the models used by banks in making decisions on the provision of finance or credit.
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