SMEs with tax debt need to take action
On 22 October 2019, the Government passed law which allows the Australian Taxation Office (ATO) to disclose tax debt information of businesses to registered credit reporting bureaus (CRBs). The law received royal assent on 28 October 2019.
Under the law, the ATO can only disclose tax debt information of a business where certain criteria are met.
The ATO will only disclose tax debt information of a business to a CRB if the business meets all of the following criteria:
- it has an Australian business number (ABN), and is not an excluded entity
- it has one or more tax debts, of which at least $100,000 is overdue by more than 90 days
- it is not effectively engaging with the ATO to manage its tax debt, and
- the Inspector-General of Taxation is not considering an ongoing complaint about the proposed reporting of the entity’s tax debt information.
The ATO will notify a business in writing if they meet the reporting criteria and give them 28 days to engage with the ATO and take action to avoid having its tax debt information reported.
Many businesses have previously used the ATO like a bank and racked up debts by not paying their commitments on time. This decision could now have adverse effects on credit ratings and credit insurance limits, making it harder to maintain or extend credit terms with suppliers.
There has never been a better time to get your ATO debt in order and set your business up for success in 2020. Private Mortgages Australia is able to help businesses refinance ATO debt and pay out the tax debt with a short-term mortgage. This enables the borrower to pay off the ATO debt and build up a few months of good payment history. The borrower can then try to refinance to a long-term debt and pay off the loan.
For more information about how Private Mortgages Australia can help, read our case study or get in touch via our Contact page.
