Are you worried about your ATO tax debts being disclosed?

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Even if you run your business responsibly and make sound financial decisions, there’s still a chance you may encounter problems with tax debts. This might happen because of unexpected problems with cashflow in a given year, or because you make an honest mistake interpreting the tax code and end up owing more than you thought.

Unfortunately, starting in 2017, having a debt with the Australian Taxation Office (ATO) may begin to have serious repercussions. Soon, the ATO will be able to disclose your debts to credit reporting bureaus, and this could affect your company’s financial flexibility moving forward. Do you understand the new laws and have a plan for dealing with them?

Tax debt could be a real problem

According to a recent announcement from the ATO, the office will officially be able to disclose your tax debt information to credit reporting bureaus as of 1 July of this year, potentially affecting your ability to seek funding for further business development ventures.

The measure has been worded so that it only applies to businesses with a tax debt of more than $10,000, and the debt has to be at least 90 days old. However, if you make arrangements with the ATO to repay the debt and stick to the repayment plan, your debt may not be disclosed.

Notwithstanding, just having the debt may still negatively impact your ability to access to further lines of credit from banking institutions.

Selling assets to cover your debts

If you need to come up with quick cash to raise the money you owe to the ATO, one possible course of action you could choose is the “Sale-Back” method – in other words, selling some of your company’s assets to a lender in order to give your cashflow an immediate jolt, whilst simultaneously financing it back to still have full use of the asset. This is a great way to turn some of your equity into usable capital.

If your ATO debt is a one-time thing and not an ongoing issue, selling assets is a quick method that can help you get out of the temporary debt trouble.

Debtor finance is another possibility

If Sale-Back is not an option and you still need cash to fill your business’ needs, you might want to consider a confidential debtor finance facility.

Using this facility, your business can access up to 85 per cent of the funds owed to you, immediately, with the remainder being made available once your client settles their invoice. As your sales increase, so does your available funds.

This is the sort of reliable revolving line of credit that can help your business immediately solve the short-term debt problems you’re dealing with as well as secure a steady cashflow stream for other business initiatives.

Non-bank lenders, like Classic Funding Group, offer a range of finance solutions including Sale-Back and Confidential Debtor Finance to assist businesses with repaying their ATO debt, so if it is keeping you up at night, now is the time to resolve it.

Brought to you by David Wright, Classic Funding Group