A new arrangement will come into effect from 1 July 2017 that will allow the Australian Tax Office to contribute information to credit reporting bureaus (including CreditorWatch) about Australian businesses with unsettled tax debts over $10,000 that are 90 days overdue.
Businesses that have not paid their tax debts to the ATO will likely hurt their credit rating following the 2016-2017 financial year, as it was announced in the MYEFO that “Businesses are expected to pay taxation debts in a timelier manner to avoid affecting their credit rating.”
The information supplied by the ATO to credit bureaus will be added to the credit reports of those organisations who have defaulted on their tax debt. Users of credit bureaus will then be able to view the tax debt and will also receive email alerts when the debt is registered. The alert will allow creditors the chance to recover bad debt before the tax office issues a wind up notice, by which then, it is unlikely to retrieve payment.
CreditorWatch Managing Director, Colin Porter worked closely with the ATO to enable the disclosure of commercial tax debts and believes the arrangement will have a widespread effect for minimising bad debt as a whole.
Businesses that feel they are unable to meet their tax requirements are encouraged to make contact with the ATO as it demonstrates an understanding of their obligations and is recognised as an effort to resolve any issues they may be having.