ATO debt to affect how your credit score is calculated
17th January 2020 | News
The Australian Taxation Office (ATO) is now able to disclose business tax debt information to registered credit reporting bureaus (CRBs), brought in as part of the government’s aim to reign in overdue tax and make the system fairer to those that pay their tax on time.
This could potentially affect the ability of a business to obtain finance or refinance existing debt.
The ATO’s criteria for business debts being disclosed to CRBs is as follows:
- That the business has an Australian business number (ABN) and is not defined as an ‘excluded entity’ (a deductible gift recipient, registered charity, a government entity, and a complying superannuation entity).
- That the business’s tax debts—one or more—are a minimum of $100,000 and overdue by 90 days plus.
- That the business is not considered to be ‘effectively’ engaging with the ATO to manage its tax debt.
- The Inspector-General of Taxation is not considering a complaint made about the proposed reporting of the entity’s tax debt information.
What the ATO must do first however, is notify a business in writing, giving them 28 days to engage with them and to manage its tax debt before any debt is disclosed. Additionally, tax debt information will only be provided to CRBs if they are registered with the ATO and where they have an agreement detailing the reporting terms.
Initially the ATO will be phasing in the changes with a program of education, before targeting companies, followed by partnerships, trust and sole traders.
Clearly, there has never been a more important time to manage any unpaid tax. If you need help with any of the above, please call in at your local TaxAssist Accountants.