We have recently met with a few company directors who have received warning letters from the ATO about reporting debts to credit rating agencies. The letters warn businesses who have more than $100,000 in tax debt which are 90 days overdue, that they will be reported to credit rating agencies. Businesses are given 28 days to manage their tax debt before the ATO takes this course of action.
Such powers are not new to the ATO. In 2019, the Federal Parliament passed the Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Act 2019 that allows the ATO to, among other things, disclose a businesses’ tax debt to agencies such as Equifax, Experion and Illion. It is meant to compel businesses to deal with their tax debt.
The ATO has until recently, not actually used such powers, due to the ongoing COVID-19 pandemic and its effect on Australian businesses. This however is beginning to change. The ATO themselves have confirmed that they have issued such letters to a small number of businesses.
When can the ATO take this action?
The ATO can take this action if:
- The tax is owed by a business with an ABN;
- The tax debt is at least $100,000;
- The debt has been due and payable for more than 3 months;
- There are no active complaints between the taxpayer and the ATO; and
- The debt must not be subject to a payment arrangement.
What can you do if you received such a notice?
The first thing you should do is speak to either your accountant or an insolvency professional. They should be able to assist and advise you on the steps to be taken to manage your tax debt and make contact with the ATO.
Businesses which have been reported will be significantly impacted, especially in terms of their ability to access financing. A qualified professional will be able to review the financial affairs of your business and provide you with options to deal with your tax debt, including negotiating a payment arrangement with the ATO.
Contact us for assistance
Cactus Consulting is a team of insolvency professionals with decades of experience in dealing with the ATO. We are equipped with the expertise and knowledge to review your circumstances and provide you with options moving forward, including negotiating with the ATO.
If you wish to speak to one of our professionals, contact us via phone, email or chat for a free no obligations discussion.