If you are a small business owner; have an ABN and a tax debt of more than $10,000 that is at least 90 days overdue then NOW IS THE TIME TO ACT.
From the 1st July, 2017 (10 weeks away) the Australian Government will allow the ATO to disclose tax debt information of businesses that have ‘not effectively engaged with them' to credit reporting agencies.
Initially this the measure will apply only to business that have:
These new 'powers' given to the ATO would be applied on a 'discretionary basis' but it remains to see exactly how the ATO will apply its 'discretion'. DON'T be an ATO test case!
The key message for SME owners is to engage with the ATO very early on when tax debts can't be paid on time. Failure to do anything with the ATO may expose owners to severe consequences.
Once a credit reporting agency has been notified of the tax debt arrears, the default becomes public record which may affect a business’s credit applications with banks, financiers and suppliers. If credit applications are declined as a result of the default, the ongoing viability of the business may be impacted.
What should you be doing?
You could ask
I have seen the impacts of adverse credit files for small businesses that show <$500 default to a Telco. These are making it hard for small businesses to get credit; imagine a $10,000 ATO Debt. These defaults stay on your credit file for up to 5yrs.
If your business relies on credit (finance) to operate and you have current Tax Arrears you must address this now. Time is running out! There are options in the market to help clear up existing arrears and facilities (both secured and unsecured) that will assist business owners meeting their tax obligations into the future.
About the author
Steve Keefe has 17yrs experience in Banking and Finance;including as a Commercial Banker for a big 4 bank. Now, as a specialist Business Finance Consultant and Broker he helps business owners manage and resolve financial problems; including raising money to acquire assets, managing cash flow and paying out ATO debts. For peace of mind Steve offers Finance Reviews for business owners so you know what options are available to you right now. The best way to contact Steve is via email at email@example.com