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ATO debt – disclosed to external agencies, such as banks

Following the enactment of legislation in late 2019, the ATO can disclose certain business tax debt (ATO debt) information to external credit reporting bureaus.

This information will primarily be used when issuing external creditworthiness reports in relation to relevant businesses, effectively treating tax debts in a similar manner to other business debts.

The purpose of allowing the ATO to report ATO debt is to:

  • encourage businesses to engage with the ATO to manage their tax debts and, where an business is unable to pay a tax debt in full by the due date, enter a sustainable payment plan that is agreed between the ATO and the business
  • support more informed decision making within the business community by making large overdue tax debts more visible, and
  • reduce the unfair advantage obtained by businesses that do not pay their tax on time and do not engage with the ATO in managing their tax debts.

More recently, the Government issued a Declaration to determine exactly what class of entities may be subject to ATO debt disclosures, including entities that:

 

  •     are registered in the Australian Business Register and are not a complying superannuation fund, a DGR, registered charity or government entity; and
  •    have one or more tax debts totalling at least $100,000 that are overdue for more than 90 days, disregarding:

–     tax debts where the entity has an arrangement to pay the ATO by instalments (i.e., via a payment plan);

–     tax debts subject to an application for release on grounds of hardship; and/or

–     tax debts subject to dispute via an objection, AAT or Federal Court review that has not been finalised.

Additionally, the Declaration does not allow debt disclosure for taxpayers who have an active complaint concerning the disclosure of tax debt information that is, or could be, the subject of an Inspector-General of Taxation (‘IGOT’) investigation.

Importantly, if there is such a complaint, the ATO can only proceed with a disclosure of the debt where it is not aware of it after taking reasonable steps to confirm whether the IGOT has such a complaint.

Ref: Taxation Administration (Tax Debt Information Disclosure) Declaration 2019

 

 

If you need to bring your tax affairs up to date and get on top of your business tax debt, contact us on 07 3160 7386 or [email protected].

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