ATO TO REPORT TAX DEBTS TO CREDIT REPORTING AGENCIES
The federal government has been, for some time, concerned about the escalating debt from taxpayers who would like to use the ATO as a bank. Businesses are either delaying or not paying their obligations such as GST, PAYG or income tax.
The government announced in it’s Mid Year Economic & Fiscal Outlook report last December that it will allow the ATO, from July 2017, to tell Credit Reporting Agencies about businesses that have not “effectively engaged” with it about their tax debts.
Initially, this measure will only impact businesses with ABN’s & tax debts over $10,000 that are at least 90 days overdue. It is clear that the ATO will target bad taxpayers and bad communicators. These businesses have exploited the opportunity to preserve their cashflow by delaying payment of their tax obligations and thus gain an unfair financial advantage over businesses that are compliant.
The disclosure of such information to Credit Ratings agencies is likely to have serious implications for businesses that rely on their credit rating to obtain credit from their banks or seek to extend credit terms with their suppliers.
On the flip side, the changes will provide protection to those businesses that rely on credit rating agencies for guidance on who they should provide credit to.
These new changes will provide the ATO with discretion to report businesses that have not engaged with them to credit reporting agencies. Conversely, businesses who are up front with their communication with the ATO are unlikely to be affected by these changes.
However, should you have concerns regarding the impact that these changes may have on your business, the team at the Garis Group can assist. Our view is that early intervention is the key and we can provide advice on the most appropriate strategy for your business.
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Categorised in: Money Talk
This post was written by The Garis Group