ATO to Reveal Businesses with Tax Debt to Credit Agencies
The ATO may disclose tax debt information of businesses with outstanding tax liabilities to Credit Reporting Bureaus.
The announcement was made by Treasurer Scott Morrison on the release of the 2016-2017 Mid-Year Economic and Fiscal Outlook. With this initiative, the Federal Government seeks to improve transparency of taxation debts and take control of overdue tax owed to the ATO worth $19 billion. Small businesses will be a “key area of focus” of the ATO as they make up most of the taxpayers with outstanding liabilities (65.2%). The Tax Office reported that only 72.3% of small business paid their debts on time.
From 1 July 2017, the measure will initially apply to businesses with an Australia Business Number (ABN) with a tax debt over $10,000 and is at least 90 days overdue.
When this is implemented, defaults can be recorded on a taxpayer’s credit history and will remain on their commercial credit file for five years. This means that businesses who will not engage with the ATO to settle their outstanding debts before the next Financial Year (2017-18) can expect their credit rating to be adversely affected.
Given the consequences of this measure, especially on small businesses, it is recommended to engage with the Tax Office immediately to manage the debt. Business owners can seek advice from an accountant and have them deal with the ATO on their behalf.
If you need assistance on any outstanding tax debts or ongoing issues with the ATO, you can consult with our Small Business Accountants to help you develop a strategy to manage tax debts and improve your cash flow management.
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