Disclosure of business tax debts – engaging with the ATO is important & helpful!
The ATO is in the process of writing to taxpayers that may be eligible to have their tax debts disclosed to credit reporting bureaus (‘CRBs’).
This letter from the ATO provides business taxpayers with information on how to effectively engage with the ATO to manage their tax debt – so that taxpayers can avoid disclosure to a CRB by making payment in full or negotiating a payment plan.
The ATO can potentially report outstanding tax debts to a CRB where the following criteria are satisfied:
- The taxpayer has an Australian business number and is not an excluded entity;
- The taxpayer has one or more tax debts and at least $100,000 is overdue by more than 90 days;
- The taxpayer is not engaging with the ATO to manage their tax debt; and
- The taxpayer does not have an active complaint with the Inspector-General of Taxation about the ATO’s intent to report its tax debt information.
Excluded entities are a deductible gift recipient, a complying superannuation fund, a registered charity and a government entity.
The purpose of this letter from the ATO is to raise awareness of the actions that the ATO can now take under the Disclosure of Business Tax Debts measure.
The letter will be sent to all taxpayers with business tax debts that currently meet the criteria (discussed above) for disclosure.
This letter from the ATO provides business taxpayers with information on how to effectively engage with the ATO to manage their tax debt.
Taxpayers can avoid disclosure to a CRB by making payment in full or negotiating a payment plan.
If an eligible taxpayer does not take steps to actively manage their debt, they will remain eligible for disclosure.
Before the ATO takes any final action to disclose a tax debt, it will issue the taxpayer with a formal Intent to Disclose Notice.
If a taxpayer receives an Intent Notice, asking them to ‘Act now or your tax debt will be reported to credit reporting bureaus’, the taxpayer or their tax agent must contact the ATO within 28 days of receiving the notice to avoid the debt being reported.
It is crucial for taxpayers to engage with the ATO early before their debts become unmanageable.
Editor: If the ATO reports a taxpayer that has an outstanding debt to a CRB, this can have a negative impact on the client’s credit rating.
This in turn may affect the client’s ability to borrow from banks and other financial institutions.
A note from Highview: This is not a scare tactic by the ATO, but we understand getting a letter like this can be stressful. However, the ATO is implementing a process that can help. We want to help our clients too (of course!) – so please if you receive a letter & want advice chat with your Highview accountant promptly. Being proactive about this issue & putting a payment plan in place is crucial in managing your debt – and reducing your stress!
SCAMS: Don’t forget about scams. If you’re ever unsure or in doubt call your Highview accountant about a letter or phone call you’ve received from the ATO before taking action – we can advise the legitimacy. Or call the ATO directly on their secure line 13 11 42 or visit their website here: https://www.ato.gov.au/
Source: May 2022 – Practice Update
Please note: Many of the comments in this publication are general in nature. Anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.