Would you like to know when a customer has a significant tax debt with the ATO?
A government proposal to allow the ATO to share information about business tax debt to credit bureaus like CreditorWatch was re-introduced to parliament this week. The legislation would improve the ATO’s ability to address the $10 billion small business tax gap by placing extra pressure on companies which have excessive tax debt.
Under the proposal, the ATO would be allowed to disclose excessive business tax debts to credit bureaus. However, this would only affect companies who have tax debts in excess of $100,000 and overdue for 90 days or more. The ATO would not be allowed to disclose the information if the tax debt is disputed or if a payment plan is in place.
By disclosing this information, the default would be visible on a commercial credit report and the credit scores of companies could be negatively affected.
CreditorWatch views the proposed legislation as an excellent opportunity on multiple levels for businesses, the ATO and the economy in general.
Too often, businesses take on a customer that has an excessive tax debt, but they have no real way of identifying it, that is until the business is wound up by the ATO and subsequently goes into administration.
“While a credit report may look fine, behind the scenes the business could be struggling with a sizeable tax debt, using the ATO as a bank of sorts,” explains CEO of CreditorWatch, Patrick Coghlan. “It is fantastic that this legislation has been proposed again. The outcome will further empower businesses with the knowledge they need to know before taking on a new customer. It will result in more tax revenue being collected and provide greater transparency in the supply chain.”
“The legislation is fair, reasonable and transparent. It serves to protect businesses that are doing the right thing. To those businesses with sizeable tax debts I say, get in touch with the ATO sooner rather than later. They will work with you to manage the debt. Burying your head in the sand is not an option.”
The legislation will go some way to limiting the domino effect that sees businesses with tax debts wound up, which in turn results in their suppliers going into administration as a result of the bad debt.
This isn’t the first time this legislation was introduced. Back in January 2018, it was put forward but for businesses with a smaller tax debt of $10,000 or more to be reported.
For more information, please contact CreditorWatch.
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