From 1 July 2017, the ATO can report business tax debts that amount over $10,000 and are 90 days overdue. This would be especially concerning for small business owners, as it is reported directly to credit reporting agencies. Until recently, it has been common for most small businesses to treat the ATO as a sort of creditor. All this is set to change as the ATO continues with a new practice of reporting overdue balances to credit reporting agencies.
When handling situations such as these, it may be worth considering how a debt agreement will help. Most credit reporting agencies are happy to negotiate a suitable debt agreement, and we can do this on your behalf.
As a small business owner, it is essential that you understand how this impacts your ability to obtain credit. Even if banks or institutional lenders are willing to lend to your business, interest rates charged on the principal amount will be higher. Also, general suppliers providing a line of credit for daily operations may cease to do so, given the weight of a default 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 as ‘paid’. However, the listing will stay on the credit file for five years from the date of entry. If you own a small business and are concerned that this may affect you, contact us to learn what your options are.
At Australian Debt and Insolvency Solutions (ADAIS), we assist clients who find difficulty paying their tax debts on time. After reviewing your circumstances, we can propose appropriate solutions for debts owed to the ATO. We can liaise with the ATO or other creditors on your behalf, and negotiate a suitable debt agreement. Wherever necessary, we can also help to obtain refinance against your property or fixed assets and explore a consolidated loan to ensure your outstanding debts are paid in a monthly instalment.
Give us a call to see how best we can assist you with your situation.