The ATO Can Now Disclose Your Tax Debt
With legislation expanding ATO powers regarding the disclosure of tax debts, CapitalQ Community Members are encouraged to be aware that the ATO can now pass on information regarding your outstanding tax debts to credit agencies.
This can in turn impact your credit rating and impact an ever increasing number of areas of your financial (and potentially personal) life.
The Purpose of the Tax Debt Disclosure Measures
According to the ATO, the purpose of allowing disclosures of tax debts is to:
- Encourage businesses to engage with the ATO to manage their tax debts,
- Encourage businesses facing difficulties in meeting tax payment obligations to agree to, and stick to, sustainable payment plans,
- Support informed decision making within the economy by making large overdue tax debts more visible, and
- Reduce the unfair advantage of businesses that don’t comply with their tax obligations.
Who Can be Subject to the Disclosures?
The ATO have now announced who may be subject to such disclosures.
Accordingly, the ATO will disclose the tax debt of a BUSINESS if all of the following apply –
- The business has an (ABN), and is not an excluded entity
- The business has one or more tax debts, of which at least $100,000 is overdue by more than 90 days
- The business is not effectively engaging with the ATO to manage its tax debt, and
- The Inspector-General of Taxation is not considering an ongoing complaint about the proposed reporting of the entity’s tax debt information.
The Silver Lining – You have 28 Days to Avoid the Disclosure
The ATO has confirmed however that it will write to any businesses that meet all of the above criteria and provide them with 28 days notice BEFORE it makes the disclosure.
This way, the business has the chance to engage with the ATO over the debt, or better yet clear the debt. They also have the chance to lodge a complaint about the proposed disclosure if they feel it is unjust or otherwise could adversely impact its ability to meet its tax debts.