From 01 July 2017 the government has announced that the ATO can report any business tax debt over $10,000 that is at least 90 days overdue to credit reporting agencies. Although this legislation is yet to be passed through Parliament, it is only matter of time before it will take effect and become a painful burden to small businesses. Until very recently, most small businesses have treated the ATO as a creditor without choice; this will change in due course with the ATO reporting overdue balances to credit reporting agencies.
It is essential to understand that this change will impact your ability to obtain credit for your business from any bank or institutional lender. Even if they are willing to lend to your business, the rate of interest charged on the principal amount will be much higher given the significantly higher risk of lending. Also, general suppliers who provide a line of credit for the day to day operations of your business may not do so given the weight of the default listing on your credit file.
Such an entry usually stays on your business credit file for approximately five years. If the tax debt has been cleared, the listing is updated to ‘paid’ however; the listing will stay on the credit file for five years from the date of entry.
At Australian Debt and Insolvency Solutions (ADAIS), we provide assistance to those who are unable to pay their tax debts on time. We care to review your circumstances and propose appropriate solutions to deal with any debts you might owe to the ATO. We liaise with the ATO and any other creditors you may have to negotiate a suitable repayment structure along with appropriate measures to keep your debts in check. Where necessary, we can obtain refinance against your property or fixed assets and look at obtaining a consolidated loan for all your outstanding debts to ensure it is paid back in one simple monthly installment.
Give us a call to see how best we can assist you with your situation.