In his mid-year economic update, Treasurer Scott Morrison has revealed that the Government has given the Taxation Office the discretion to disclose tax debt information of businesses to credit reporting bureaus. This measure will start from 1st July 2017.
Treasurer Morrison has raised concerns that businesses that do not pay their tax or engage effectively with the ATO are gaining an unfair financial and competitive advantage over those who do the right thing and ensure all of their tax obligations are paid on time.
Initially this will only apply to businesses with ABN’s and tax debt of more than $10,000 that is at least 90 days overdue.
In his announcement, Treasurer Morrison pointed out that of the $19 billion in overdue tax, 65% of that was made up of small business taxpayers.
The impact to businesses will be immense, as these defaults once recorded will remain on a taxpayers credit rating for up to five years. This could impact a business’s ability to obtain loans and credit, or increase the interest rate when borrowings are approved.
For our clients, it is important to note that these measures apply only when a taxpayer is not engaging the Tax Office in discussion. If you do have an outstanding debt with the ATO, the most important thing you can do is open the lines of communication. In most cases a payment plan can be put in place to allow you to pay your debt down over time. As long as you ensure the payments are met, you will not be subjected to these new measures.
We encourage our clients to speak to us if they have any concerns. We will be able to assist by communicating with the Tax Office on your behalf to put that payment plan in place. If you require further assistance to look at your cashflow, budgets or long term financial plan, please contact us at Crosby Dalwood on (08) 8362 0466. Our Accounting and Financial Planning teams are here to help.
written by Natalie Spillane