The ATO will disclose to credit reporting bureaus the tax debt information of businesses who have not effectively engaged with the ATO to manage these debts and initially only apply to businesses with Australian Business Numbers and tax debt of more than $10,000 that is at least 90 days overdue.

From 1 July 2017, the ATO will be allowed to disclose tax debt information of any business that hasn’t effectively engaged with them to manage those debts to credit reporting bureaus.

Initially it will only apply to businesses with:

  • Australian Business Numbers (ABNs)
  • a tax debt of more than $10,000 that’s at least 90 days overdue.

Once the report goes on a business’ commercial credit file, it will be there for five years.

In the Mid-Year Economic and Fiscal Outlook (MYEFO),  Treasurer Scott Morrison announced that from 1 July 2017 the Australian Taxation Office (ATO), will disclose tax debt information on businesses to credit reporting bureaus.

The transparency will benefit not only government revenue, but also assist in improving the analysis of the various business sectors. As the largest creditor in Australia, the ATO’s non-disclosure of businesses that default on their tax obligations is a major drain to Australia’s tax revenue. The move not only helps members by closing the information gap when assessing credit risk but will also help credit managers identify high-risk businesses and provide some comfort when dealing with small businesses that are meeting their obligations.

The tax office is owed some $19 billion in overdue tax, including a staggering $13 billion by small businesses with turnover of $2 million or less. The government estimates this measure will increase the budget by $63 million in underlying cash balance terms over the forward estimates period.

The pros and cons

There are arguments both for and against this significant change.

It will provide a competitive advantage to those businesses that have a good payment and compliance history with the ATO, and of course, those businesses with bad debt and a poor compliance history will be penalised.

Most mainstream banks will not approve loans when a business has an outstanding ATO debt. It does fall into specialist lending when needing to raise money for ATO debt. Speak to us and we’ll help you navigate through the maze of lenders, in order to get you the best deal.

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