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ATO will add unpaid tax debts to your credit record

Article By Adam Hurwood | | Accounting & Tax

As announced in the Federal Budget Mid-Year Economic and Fiscal Outlook, from 1 July 2017, the Australian Taxation Office (ATO) will have the authority to disclose small businesses’ tax debt information to credit reporting agencies.

This publicly available information can be severely harmful for small business as it can have the following direct impacts:
– Supplier relationship deterioration;
– Abilities to access borrowing from Banks/other credit providers;
– Capacities to negotiate borrowing terms; or
– Cashflow and survivability

This proposal will initially apply to small businesses that have the following:
– An Australian Business Number (ABN);
– Tax debt of more than $10,000 that is at least 90 Days overdue;
– Not engaged with the ATO to manage repayments.

In preparation to this new measure, below are some precautionary actions that can be taken.
1. Meet tax and lodgement obligations
2. For any existing amounts owed, engage and negotiate a payment plan with the ATO
3. Ensure there are adequate forecasts, budgets and cashflows in place.

With this new measure, it is now more important than ever for small businesses to pay their tax debts on time. For any assistance with your budget and cash flow planning, please do not hesitate to contact your Altitude Advisers.

Written by Derek Le