Treasurer Scott Morrison announced last December that the ATO plans to disclose tax debt information to credit reporting bureaus from 1 July 2017.
The ATO will disclose to credit bureaus the tax debt information of businesses who have not effectively engaged with the ATO to manage their taxation debts. It is anticipated that initially this will only apply to businesses with tax debt of more than $10,000 and being at least 90 days overdue. Keep in mind that a mark on your credit file will usually last 5 years, and is very difficult to get removed even after you have paid the debt.
The move will provide businesses with more data for credit managers (accounts receivable department), to conduct a more complete credit risk assessment, and businesses captured by the criteria should be aware of potential adverse impacts this move could have on their business in two fundamental areas:
- Firstly, there is the potential that the move could impact on the credit appetite of the traditional sources of funding for small and medium sized businesses, leading to challenges in accessing credit.
- Secondly, businesses relying on trade credit may be adversely impacted if suppliers tighten their terms of trade as a result of the additional data they can gain from credit reporting providers. This may also be driven by reduced limits offered by credit insurers.
Just be aware that this now exists, and feel free to contact us if you require any assistance in managing your tax affairs!