DISCLOSURE OF BUSINESS TAX DEBTS
20 May 2022
Disclosure of business tax debts over $100,000 may have their credit file and score negatively marked by the ATO*
For many businesses, ATO debt can be a serious issue. At the end of 2020 ATO debt stood at around $34 billion – this is its largest ever debt.
* Criteria for ATO to report business debt
You have an Australian Business Number (ABN) and are not an excluded company
You have one or more tax debts and at least $100,000 is overdue by more than 90 days
You haven’t engaged with the ATO to manage the debt
You don’t have an active complaint with the Tax Ombudsman (IGTO) about the ATO’s intent to report your tax debt information
If you are effectively engaging with the ATO to manage your tax debt, it will not report it, even if it is $100,000 or more.
Change in legislation means unpaid business tax is reported to credit agencies.
Legislation has passed that empowered the Australian Tax Office to start, if it chooses to reporting unpaid business tax debts to credit reporting agencies, making it possible for such information to be included in business credit reports.
Business tax debt captured in the tax debt disclosure threshold includes
· income tax debts
· activity statement debts
· superannuation debts
· fringe benefit debt
· penalties and interest charges
Outside of reporting to Credit Agencies, what else can the ATO do?
Turn your ATO debt over to external debt collection agencies – if you cannot pay or reach an agreement about paying your debts.
Garnishee Notices – with a Garnishee Notice, the ATO can get a person or business that holds money for you (such as your bank), or will hold money for you in the future, to pay them directly to reduce your debt.
Director Penalty Notice – with a Director Penalty Notice, a director can incur penalties equal to the amount of the PAYG withholding liabilities and superannuation guarantee charges that have not been paid. The ATO can issue the Director Penalty Notice which makes it possible to start legal proceedings to recover the penalty.
If the ATO is unsuccessful in these attempts at debt collection, it can take other steps, including:
Filing a claim or summons
Filing a creditor’s petition to make you bankrupt
Issuing a statutory demand requiring a company to pay its entire debt or enter a payment plan with 21 days
Taking action to wind up a company if it hasn’t paid its debts or entered into a payment plan
If you are in business, staying on top of your tax debt can be challenging.
ATO payment plans are not always suitable for businesses and sometimes, just deferring the issue compounds the problem.
One option is to refinance your tax debt
There are numerous ways to do this. We have helped many businesses bring their tax debt and cash flow under control.
Do not bury your head in the sand!
Find out how me and my team can assist your business
ring 0410 533 680
or contact me at
carla.r@quantumbusiness.com.au
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice.