From 01 July 2017 the ATO can report any business tax debt over $10,000 that is at least 90 days overdue to credit reporting agencies. Until recently, most small businesses have treated the ATO as a creditor. This will change with the ATO reporting overdue balances to credit reporting agencies.
It is essential to understand how this will impact your ability to obtain credit 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. Also, general suppliers providing a line of credit for day to day operations may not do so, given the weight of the 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 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 unable to pay their tax debts on time. We review your circumstances and propose appropriate solutions for debts you might owe the ATO. We liaise with the ATO and any other creditors to negotiate a suitable repayment structure to keep your debts in check. Where necessary, we can obtain refinance against your property or fixed assets and look at a consolidated loan to ensure your outstanding debts are paid back in one simple monthly instalment.
Give us a call to see how best we can assist you with your situation.