We have just been informed that the Australian Taxation Office intends to notify credit rating agencies of businesses that have outstanding tax debts. This will take effect from 1st July 2017.

The plan will see the ATO disclose the tax debt information of businesses that have not effectively engaged with the ATO to manage these debts to credit agencies.  This means that if your or your clients business has a tax debt and steps have not been taken to work with the ATO, they will ensure that the business owner cannot access new finance or potentially maintain existing finance levels without first addressing the debt to the ATO.

We worry that this move will put significant pressure on business operators. The government says it expects the change will encourage businesses to pay their tax debts in a timely fashion to avoid doing damage to their credit ratings 
Debts will only be reported where:
  • The debt is for a taxpayer that has an ABN
  • The debt is not in dispute
  • No payment plan has been established or an existing payment plan has defaulted
  • The debt amount is over $10,000 and unpaid for over 90 days (we have little doubt however that this measure will eventually extend to all tax debtors)
The important thing is that anyone with an outstanding tax debt engage with the ATO - This will prevent the credit agency threat being triggered. The ATO will notify a business that it intends to refer its tax debt to a credit bureau before it passes on the information.