It’s back on the table. The Federal Government is introducing a rule designed to encourage the repayment of tax debt. Introduced in parliament by Minister for Housing and Assistant Treasurer, Michael Sukkar, the debt that a business has with the ATO could be disclosed to credit reporting agencies.
When this was first suggested before the election there where howls of protest, but this time around, and after a convincing election, assume it will go through.
This is for debt of over $100k and due in90 days, and quite frankly when this is your debt you do have a few problems, especially if you are planning to pay the debt from the profit of the business. Staying compliant with BAS etc. by lodging and paying on time will be a challenge.
The new rules allow that when a business is effectively engaged with the tax office, and where taking action in accordance with the law, it would not form part of the threshold in these proposed new rules. We’ve seen instances in the construction industry where a compliant business struggles against a non-compliant business when competing for work.
We’ve seen companies with considerable debt (well over $500k), not be chased by the ATO and wonder sometimes, what is the logic of the ATO in collection of debt?
While this new rule may be a concern to struggling businesses, perhaps it will also begin the journey to a level playing field where businesses not paying their tax no longer have a commercial advantage.
Somethings to think about…
- While you may have a tax debt, (and there seems to be nothing but a stream of different coloured, computer generated letters from the Australian Taxation Office), they will eventually become robust and will soon have the options of destroying your credit in the process. You need to make a plan and make changes in your business to deal with the debt.
- The best way to manage tax debt is to pay it as you bank money, or every week, on a percentage that can cover GST and payroll.
If you really want to start the journey–contact us.
For Fresh Numbers clients –please give your client co-ordinator a call and make a plan.
For YBA website and Facebookprospects–please give Your Business Angels a call on ph.1300 982559 and let’s put a plan together.