The Federal Government has recently announced that it will now allow the Australian Taxation Office (“ATO”) the right to disclose tax debt information of businesses to registered Credit Reporting Bureaus (“CRBs”) such as Equifax (previously known as VEDA) and Dun & Bradstreet.
These changes could mean significant impact for businesses, as their ability to secure any type of funding from banks and other lenders will become extremely limited. For those businesses that are able to secure funding, this will usually be at a significantly higher interest rate.
While the specific circumstances and exceptions for disclosure of information are yet to be finalised, it is likely that the ATO will only disclose tax debt information of a business to a CRB if the business satisfies the following criteria:
· The business has an Australian Business Number (ABN), and is not an excluded entity;
· The business has a tax debt of at least $10,000.00 which is overdue by more than ninety (90) days; and
· The business is not effectively engaging with the ATO to manage its tax debt.
The Minister for Revenue and Financial Services Kelly O’Dweyer says “the change will help to support informed decision making in the business community and remove the unfair advantages gained by businesses who do not pay their tax on time”.
The aim of the legislation is to encourage more businesses to actively work with the tax office to manage their debts adequately. Businesses which are effectively engaging with the ATO to manage their tax debts will not have their tax debt reported to CRBs. The definition of effective engagement is yet to be determined, but it is expected that it will include businesses which have established a payment plan with the ATO or are disputing their tax-related liabilities.
The ATO will notify a business if they meet the reporting criteria advising that they have 21 days to respond before their tax debt information is reported to CRBs.
If you think your credit may be affected or you have any concerns regarding the above, Please contact our office today on (07) 3067 8914.