New ATO Powers to Report Tax Debts
In the 2017 mid-year budget the Government announced that it will allow the Australian Taxation Office (ATO) to disclose tax debt information to registered credit reporting bureaus (CRBs). These new powers are intended to encourage taxpayers to manage their unpaid tax debt as they would any other debt to other creditors.
At this stage the proposed new powers will be targeted at businesses. The ATO will only disclose tax debt information of a business to a CRB if the business meets all of the following criteria:
- it has an Australian Business Number (ABN)
- it has a tax debt of at least $10,000 that is overdue by more than 90 days; and
- it has not effectively engaged with the ATO to manage its tax debt.
The ATO will notify a business that they have 21 days to effectively engage with them before their tax debt information is reported to CRBs. It is yet to be seen what is required to show sufficient ‘engagement’ with the ATO.
A credit default recorded against a business can have a significant impact on a business, creating difficulty in accessing funding from banks and other lenders. Regardless of whether the debt is eventually paid to the ATO the default lasts for five years. A default can only be removed before the conclusion of the five years if it can be proven that there is an error with the default.
The above measure will commence from the date of Royal Assent of the proposed new legislation. If your business has a tax debt of over $10,000 it is important to engage with the ATO to arrange a payment plan before these new powers are available to the ATO.
If you require any advice and assistance in relation to your tax debt or negotiating a payment plan with the ATO, please contact our team of tax solicitors at The Quinn Group on (02) 9223 9166 or submit an online enquiry form today.