Its a well trodden path that when times are tough Aussie businesses might lean on the Tax Office (ATO) for some cash flow relief by delaying tax remittances. However this might be about to change with the news that Government has recently passed legislation allowing the ATO to publish certain tax debts with the credit reporting bureaus.
Banks hate Tax Debts. If there is one thing that will kill the romance between a business and their lender its a tax debt. You’d get a better reaction with a venereal disease I reckon. Historically, it has been possible however to hide these debts for long periods from your bank because unless they ask for copies of your tax portal statements they have had no other way of knowing. This may all be about to change however.
From 1 November 2019, new legislation now allows the ATO the ability to report to bureaus, however it does give business considerable chance to stop the reporting. The tax debt needs to qualify to be eligible for the ATO to report it in the following way:
- The business must hold an ABN and not be specifically excluded
- It must have debts in excess of $100k and these debts must be >90 days in arrears
- The business must fail to engage with the ATO to develop an acceptable management strategy
So as long as you are proactive in your dealings with the ATO, for now you will avoid being reported.
If you are having or expect to have some challenges paying your tax debts and you are concerned about your current or a future bank’s reaction to this, there are some lending strategies that you can draw on:
- Short term business loans (unsecured or secured)
- Personal lending (home loan extensions, personal loans)
Our team of experts can work through some options with you at no cost for the month of February is this is something keeping you awake at night.