Will a tax debt affect my small business from getting a loan? With the changes of privacy regulations introduced in 2019, the Australian Taxation Office are now legally allowed disclose any outstanding tax debts to credit reporting agencies. So, the answer is most likely yes, but there are a few exceptions.
With coronavirus and the added pressure from those affected by the recent flooding, it’s little wonder that paying your tax debt is the last thing on your mind. While these may be extenuating circumstances, it’s important to reach out to the tax department and make alternative arrangements.
Those affected by natural disasters are eligible for extra time to pay the ATO. If you fail to make arrangement, it could result in serious penalties and affect your future borrowing capacity. Talk to a taxation specialist they can negotiate a deadline extension.
While these new regulations may seem unfair to business owners who are struggling, they were put in place to stop Australian businesses that constantly flout the tax laws. Most businesses who continue to miss their tax obligations will see their debt information released the major credit reporting agencies.
Is my business exempt from having my tax debt disclosed?
There are some regulations that prevent the ATO from releasing tax debt information. For example, not-for-profit organisations and charities that are registered, government departments, superannuation funds or those with self-managed super funds (SMSF) are exempt.
For your business tax debt information to be released, your business must have exceeded the 90-day payment date, more than one tax debt over $100,000 and made no attempts to reach out to the tax office. There must also be no active complaints raised against your company with the tax ombudsman.
What if I can’t pay my tax debt?
There are some situations where you may be able to apply to a payment extension or organise to pay in installments, but the final decision will be decided on a case-by-case basis. These extenuating circumstances are:
- Natural disasters, such as flooding, earthquakes, cyclones.
- Serious illness, either for yourself or a family member.
- Death.
Note that cashflow issues or financial hardship are not excuses to avoid paying your tax bill.
The ATO also must follow procedures before releasing any information to credit reporting agencies and these include:
- Written notice warning you that your tax debt information will be released.
- The circumstances in which your business meets disclosure requirements.
- What you can do to stop the ATO releasing your debt information.
If you believe the tax department have made a mistake, you have 28 days to contact the Australian Taxation office to rectify the situation.
Do you have an unpaid tax debt?
If you’re worried about an unpaid tax debt and the effect it will have on your future borrowing capacity, please reach out to a professional taxation specialist. They will be able to liaise with the ATO for you and negotiate repayment installments or a deadline extension.
