From July 1, 2017, the Australian Tax Office will be allowed to report your company tax debt to credit reporting agencies, marking it on your credit file. If you have a company tax debt, this could have a serious impact on the way you run your business. Here is all you need to know about the changes and what you can do.
The Need for Change
The Australian Tax Office is owed close to $19 billion in overdue tax. Near $13 billion of this is owed by small businesses with a turnover of $2 million or less. In an effort to encourage these small business to pay their tax debt, the Government has introduced new powers which will allow the ATO to disclose tax debts to credit reporting agencies. These tax debts can be marked on your companies commercial credit file for 5 years which may affect the business' future trading and viability.
Is Your Company at Risk?
The ATO has the power to report on any business that hasn't effectively engaged with them to manage their debts. So if you are experiencing short term cash flow issues, it is important to maintain open lines of communication with the ATO. The ATO can report on your business if you have an ABN and a tax debt of more than $10,000 that is at least 90 days overdue.
What You Can do to Avoid Your Credit File Being Marked
If you aren't able to repay your tax debt on time and in full, you are at risk of having it noted on your commercial credit file. But there are some things you can do to avoid being penalized.
- Stay in touch - never ignore the ATO. Make sure you discuss your situation with them and keep them up-to-date on your progress.
- Build Goodwill - not just with the ATO, but also with your bank, suppliers and customers.
- Meet the deadlines - make sure you lodge all the required documentation on time.
- Pay your debt - organize a repayment arrangement with the ATO and make affordable repayments over time.
When Debt is an Overwhelming Problem
Often, when tax debt is a problem, you may also be struggling with day to day expenses and have growing credit card debts, overdue bills and late payments. Debt stress can be overwhelming and impact negatively on all other aspects of your life. If you are struggling with debt, you can turn your life around. There are a number of solutions available to help you get a handle on your finances. These solutions include mortgage refinancing, informal and formal debt agreements, budgeting, debt consolidation and even bankruptcy and liquidation.
How Debt Rescue Can Help You
Debt Rescue provides customised solutions to people in debt. No two circumstances are the same, everyone copes with debt in their own way. This is why Debt Rescue will take the time to get to know your situation and tailor a solution for you. Whether you are a sole trader with an unaffordable tax debt or struggling with more than $10,000 of credit card debt, we can help you.
Our client consultants have years of experience in helping people overcome their debt. They will take the time to listen to your situation and advise you on your options. If you would like to discuss you options call us on 1800 560 568.
For more information on business debt and how we can help, check out our business debt page.