Credit Management
ATO’s disclosure of business tax debts to credit reporting bureaus By Patrick Coghlan MICM*
Businesses with significant tax debts will have their information reported to credit reporting bureaus; credit scores will be impacted.
1. Tax debt information disclosure
Patrick Coghlan MICM
18
What is the Taxation Administration (Tax Debt Information Disclosure) Declaration? In the future, businesses with significant overdue tax debt will have their information become public. When the Taxation Administration (Tax Debt Information Disclosure) Declaration 2019 comes into effect the ATO will be releasing their tax debt information to registered credit reporting bureaus (CRBs), including CreditorWatch. In the 2016-2017 Mid-Year Economic and Fiscal Outlook, the government announced its intention to allow the ATO to report tax debt information of certain entities to CRBs. On 19 December 2019, the declaration was made official and the legislation will come into effect later this year. Currently, the ATO is not authorised to report any tax debt
CREDIT MANAGEMENT IN AUSTRALIA • January 2021
information under the Confidentiality of Taxpayer Information provisions. This means that credit reports currently do not factor in existing tax debt and provide a limited overview of an entity’s creditworthiness. With this legislation, there will finally be transparency over businesses that have excessive tax debt and have not engaged with the ATO to manage their debts. The default would be visible on a commercial credit report and could negatively affect an entity’s credit score.
2. Transparency of tax debt information Problems with the lack of transparency The lack of transparency about significant tax debts is detrimental to: – Creditors – Employees – Wider community and industry – Government & economy
