Following the enactment of legislation in late 2019, ATO officers will be permitted to disclose business tax debt information to external credit reporting bureaus.
This reporting will primarily be made by such bureaus in the process of issuing external creditworthiness reports in relation to the relevant taxpayer, effectively treating tax debts in a similar manner to other business debts.
Recently, the Government issued a Declaration to determine what class of entities may be subject to such disclosures, including entities that;
- are registered in the Australian Business Register and are not a complying superannuation fund, a DGR, registered charity or government entity; and
- have one or more tax debts totalling at least $100,000 that are overdue for more than 90 days, disregarding:
tax debts where the entity has an arrangement to pay the ATO by instalments (i.e., via a payment plan);
tax debts subject to an application for release on grounds of hardship; and/or
tax debts subject to dispute via an objection, AAT or Federal Court review that has not been finalised.
Additionally, the Declaration does not allow debt disclosure for taxpayers who have an active complaint concerning the disclosure of tax debt information that is, or could be, the subject of an Inspector-General of Taxation (‘IGOT’) investigation.
Importantly, if there is such a complaint, the ATO can only proceed with a disclosure of the debt where it is not aware of it after taking reasonable steps to confirm whether the IGOT has such a complaint.
Ref: Taxation Administration (Tax Debt Information Disclosure) Declaration 2019
Implications of the Business Tax Debt Disclosure
The impact of the recent legislation allowing the ATO to disclose the tax debt of all entities and individuals who owe more than $100,000 in arrears for more than 90 days will have significant repercussions.
Whilst banks and finance companies always requested that information, suppliers will now be able to access the same information. It is likely that many business will be unable to obtain credit for suppliers where they have large debt.
We have seen an increase in the amount of outstanding debt for a number of entities. If you do owe the ATO overdue amounts, make sure that you obtain payment plans and try to ensure that you keep up to date with your lodgments and payments.
Implications provided by Richard Suttie
