You may be reading this article because you’ve received a warning letter from the ATO notifying you of their intent to disclose your tax debt to credit reporting bureaus, or they may have already reported your tax debt. The ATO now have powers to disclose your tax debt to CRBs and the aftermath is a domino effect.
Reporting to CRBs; what is it?
The Government has recently announced the ATO has powers to disclose tax debt information to registered Credit Reporting Bureaus. This only applies to businesses who meet the below criteria:
- Has an Australian Business Number (ABN)
- Has a minimum of $100,000 overdue tax debt (more than 90 days). Tax debt can include the following:
- Activity Statements (GST, PAYGW)
- Superannuation Debts
- Income Tax Debts
- Fringe Benefit Tax Debts
- Penalties and Interest Charges
- Has not effectively engaged with the ATO to manage their tax debt. The ATO determine ‘effective engagement’ by:
- Having a payment plan in place, and actively meeting the terms
- Have an active objection against taxation decision and related tax debts
- Have an active review with Administrative Appeals Tribunal (AAT)
- Have an active complaint lodged with Inspector-General of Taxation in relation to the tax debt, or subject of an investigation
What is the disclosure process?
If the business has met the above criteria, the ATO begin their disclosure process by issuing an “Intent to Disclose” Notice (the orange notice).
You can view a sample of the letter here.
The notice outlines the next steps to take regarding the tax debt being reported. You will have 28 days to take appropriate action before it is reported. If you’re unsure about what to do, you can contact our insolvency experts for a free confidential consultation.
If you do not take action once receiving your “Intent to Disclose” Notice, the ATO will issue a “Your tax debt has been reported” Notice to you (the red notice).
What is the impact of tax debt being reported to CRBs?
Having the tax debts reported to CRBs can have multiple effects. It may influence a creditor’s decision as to whether they continue trading with you. Your credit rating may also may also be impacted, making it harder to obtain finance and trade credit accounts. CRBs include tax debt information in their credit reports that are available to parties who wish to purchase. They can then utilise this information to make educated decisions when it comes to the credit worthiness of the business.
If you’re unsure if your tax debt has been reported, you can get in contact with our experts and we can check for you.