If your business has a tax debt of at least $100K and it is overdue by more than 90 days, chances are you will soon receive a letter from the ATO explaining its intention to report the debt to credit reporting agencies. These letters are known as “Notices of Intent to Disclose”.
See below for the tax ruling background.
If your tax debt is reported to such credit agencies, this would have a detrimental effect on the business’s ability to maintain a good credit rating or score, leading to a possible inability to lend from banks and finance companies and/or obtain extended payment terms (credit) from suppliers.
The Notice of Intent to Disclose letter will outline ways to avoid reporting action, including paying out the debt, entering into a payment plan and several other methods. It is important to note that where exceptional circumstances have led to, and/or impacted the tax debt, such as family tragedy, serious illness and/or natural disasters, it may be possible to prevent tax debt reporting.
If you think your business may be in the firing line for receipt of one of these letters from the ATO, it would be prudent to contact your tax agent ASAP to discuss the way forward.
More info here: Disclosure of business tax debts (ATO website)
(The measure is known as “Disclosure of Business Tax Debt”, and received Royal Assent on 28th October 2019. This measure can be sourced in Schedule 5 of the Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1)).
