13 Aug Clock’s ticking: ATO to report overdue tax debts to credit agencies
A new bill recently introduced to parliament could see the Australian Taxation Office (ATO) notifying credit reporting bureaus of outstanding ATO debts.
The proposal is part of The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No.1) Bill, which was introduced into parliament on July 24 this year.
The Bill will provide the ATO with the discretion to disclose to credit reporting bureaus when a business has a debt of $100,000 with the ATO for 90 days or more.
“This will reduce the unfair advantage obtained by businesses who do not pay their tax debts and will encourage businesses to engage with the ATO to manage their tax debts,” says assistant treasurer Michael Sukkar.
Credit reporting bureau CreditorWatch adds: “By (the ATO) disclosing this information, the default would be visible on a commercial credit report and the credit scores of companies could be negatively affected.”
How could this impact your business from obtaining finance in the future? Might it deter clients from dealing with you? Could your suppliers alter their payment terms based on this information?
Will it be a hard and fast rule?
It’s unlikely this would be a hard and fast rule – the key word above is “discretion”.
Mr Sukkar says it will apply to “businesses that are not effectively engaging with the ATO to manage their tax debts”.
If this applies to your business, don’t bury your head in the sand.
This might apply to me – what are my options?
First, get in touch with the ATO, which encourages businesses to engage with it to manage their tax debts. The ATO offers sustainable payment plans agreed upon by both parties. Small-businesses may be eligible for interest-free payments on BAS debts. Also, if you have been hit by a natural disaster or are experiencing hardship there are options available.
Speaking with the ATO first is absolutely the first port of call. Being upfront and honest about your situation. Be clear about what you can reasonably undertake to pay back.
That said, not everyone enjoys the ATO impatiently hovering over their shoulder waiting for them to pay off a large tax debt.
If you’re one of those people, it’s definitely worth getting in touch with us to explore other options like short term lending.
Short term lending can take out your tax debt and possibly incorporate other short term debts you have to roll them into one manageable payment.
Contact us to find out how we can help you take action for your business.
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