The ATO will begin sending letters to businesses with over $ 100,000 in tax debt, warning them of the agency’s intention to disclose tax debt information to credit bureaus if they fail to manage their debt within 28 days.
In late 2019 the government passed a law stating businesses that have one or more tax debts of at least $100,000 that have been overdue by more than 90 days could now see their tax debt information disclosed.
This move will be the first time since the law was passed the ATO is executing their new powers.
During 2020 the ATO’s debt and deposit activities came to a standstill in response to the COVID-19 pandemic however, they will now begin a small scale program as they resume their compliance work.
The ATO has confirmed a number of companies have received these intention to disclose letters but they have not disclosed information on tax liabilities to any credit agencies as yet.
The ATO has said they had contacted a number of companies who met the criteria and asked them to either take action in settling their debts or to set up a payment plan. If no action was taken these companies were advised their tax liabilities could be reported to credit bureaus.
The impact on companies is that if they require a loan for working capital purposes to reinvigorate their business they are more than likely not going to be granted that loan because of the disclosed tax debt.
It is an extremely difficult time for businesses with about half of Australia currently under lockdown. Companies need all the help they can get to keep their business alive.
Roughly 5,000 companies are likely to fall below the $ 100,000 disclosure threshold, which includes debts such as income tax, activity statement, superannuation, fringe benefits tax, and penalties and interest expenses.
Not long ago a report was released on undisputed tax debts which revealed payment plans were on a steady decline even though collectable debt grew by its largest margin between 2019 and 2020 from $26.6 billion to $34.1 billion.
If you are concerned about your tax liabilities and the ability to borrow in the future, please contact our office to discuss the options available to you.
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Disclaimer
The above information is a brief overview and it is not intended that readers rely wholly on the information contained herein. No warranty expressed or implied is given in respect of the information provided and accordingly Hamilton Murphy, or any member of the firm, take no responsibility for any loss resulting from any error or omission contained herein. Last Updated: 20 August 2021