The Australian Taxation Office (ATO) now has additional powers thanks to new legislation which received royal assent on 28th October 2019.
To encourage businesses to engage with them, the ATO now has the power to report certain overdue tax debt to registered credit reporting agencies. Until now, overdue tax debt was not able to be listed on a company’s credit file, but this is now set to change. In the past, credit providers were only able to access adverse information, including payment defaults reported by other private sector organisations. This meant, that suppliers rarely had a full view of their customers’ ability to pay their debts, even if they carried out a comprehensive credit check.
Including overdue ATO debt will enable businesses to make more informed credit decisions which must be viewed as a good thing. On the other hand, the ATO will no doubt use this additional power as leverage to encourage businesses to engage with them earlier. This may result in businesses prioritising payment to the ATO over payment to unsecured creditors. This new legislation forms part of the government’s strategy to reduce overdue tax debt in the business sector, and at the same time give businesses more information upon which to base their credit decisions.
There is certain criteria that must be met before the ATO can disclose business tax debts including:
In addition to the above, the ATO must notify the business in writing and provide 28 days to allow the business to ‘effectively engage’ with the ATO with the view to managing its tax debt.
These new reporting measures are being introduced in phases to “ensure systems, safeguards and processes are robust”.
With rising levels of both personal and business debt, it is important for all organisation that give trade credit to have a access to a trusted debt recovery partner, so that if payment of their account is being held up due to competing and ‘more urgent’ payments, (such as tax debt) they are in a position to also effectively apply pressure and get their overdue debt paid.
If you need help to recover your overdue business debts, call AMPAC on 1300 426 722 or email us at email@example.com
Do you have debt that needs recovering? Are you unsure on where to start? Contact AMPAC Debt Recovery for solutions today and speak to one of our qualified consultants to get you started.