The Australian Taxation Office (ATO) has issued a caution to businesses carrying substantial tax debt or those that have neglected their superannuation responsibilities, instructing them to settle their dues promptly or risk having their financial information disclosed to credit reporting agencies.
The ATO has announced a return to its pre-pandemic standard debt collection approach, having issued warnings to more than 22,000 businesses since July 2023. Businesses with tax debts surpassing $100,000, overdue by more than 90 days, now face the prospect of their debts disclosed to credit reporting agencies.
The disclosure of any debt can adversely impact a business’ ability to secure finance and impact supplier relationships. Nevertheless, Assistant Commissioner Jillian Kitto has emphasised that businesses can prevent this situation by either settling their debts or getting in touch with the ATO. Businesses must either pay off their debt or establish a suitable payment arrangement within 28 days of receiving the notice of intent to disclose.
“Through the pandemic we shifted our focus from debt collection to stimulus payments and assistance with tax, but it is now time to re-establish the culture of paying tax on time,” Kitto said.
“There is over $5 billion owed by businesses who currently meet the criteria for disclosure. We must draw a line in the sand to protect the Australian community and other creditors, and to ensure a level playing field for businesses who do the right thing.”
In October, approximately 9,000 Australian businesses are expected to have their debts reported, potentially impacting their future financing. Additionally, over the course of the 2023-24 fiscal year, the ATO anticipates issuing more than 50,000 notices of intent.
“We want to work with businesses to help them get on top of their debts. Anyone with a debt is encouraged to reach out to us as soon as possible,” explains Kitto.
“We give businesses ample opportunity to re-engage with us. However, those who show continued and ongoing disregard for their tax and super obligations will have their debts disclosed.”
This is a stark warning from the ATO and we encourage all clients to speak to their advisor for any assistance regarding ATO payments. Please get in contact if you have any questions.
