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Small Business Tax Debt Set to be Disclosed Under New Legislation

Posted by Tax Debt Resolved on Oct 18, 2019 9:34:28 AM

The Australian Taxation Office (ATO) could soon disclose your business tax debt to credit rating agencies under new proposed legislation.

The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019 will allow the ATO to report businesses who have over $100,000 tax debt, are overdue by 90 days and are not actively engaged with the ATO. Tax debts to be disclosed will include income tax debts, business activity statement (BAS) debts, superannuation debts, fringe benefits tax debts and penalties and interest charges.

The Importance of the Legislation for Australian Businesses

The ATO hopes the proposed legislation will combat the amount of tax debt owed to them, with their 2017/18 annual report revealing tax debts have hit almost $24 billion. The legislation should:

  • Reduce unfair financial advantage obtained by businesses that don’t pay their tax on time,
  • Strengthen the incentives for businesses to pay their tax debt in a more timely manner and effectively engage with the ATO to avoid having their tax debts disclosed, and
  • Contribute to more informed decision making within the business industry by enabling credit agencies to make a more complete assessment of the credit worthiness of a business.

The implementation of this legislation is expected to net around $30 million over the next few years, based on the assumption the ATO will be able to recover business tax debts due to the policy change.

However, there has been much controversy surrounding the legislation, with many Australian business owners worried it will increase unneeded stress on already-struggling businesses and restrict their access to much-needed finance. A bad credit rating, which can last for up to five years, effectively stops business owners from being able to borrow money and/or set up basic services such as an internet account.

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Kate Carnell, says if a business engages the ATO for a payment plan or to dispute a tax debt, the credit agency should be obliged to permanently remove the reference to the business’ tax debts. Ms Carnell says it shouldn’t be the burden of a small business owner to have to check on the ATO and the agencies to ensure their information is correctly updated.

How Can You Protect Yourself and Your Business?

If your business has outstanding tax debt over $100,000, its best to create an action plan now to avoid impact from this legislation so you’re prepared when it becomes law. Fortunately, you don’t have to pay your overdue tax debt straight away in full. As long as you’re actively engaging with the ATO, your tax debt information will not be disclosed.

This is where Tax Debt Resolved can assist. We specialise in ATO negotiations to help your business resolve tax debt issues. With your permission, we contact the ATO on your behalf and put an immediate stop to any further legal action against your company. We can help negotiate an affordable ATO payment plan, reduce your overall tax debt and give your business the chance to get back on track.

With a manageable payment plan in place, the proposed legislation will not impact your business and the ATO will be satisfied that they no longer have to chase you for outstanding tax debts. If your business is struggling with tax debt, get in touch with our experienced team at Tax Debt Resolved today on 1800 560 558 for a free business health check and confidential consultation.

Topics: Tax Debt

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