Now that COVID-19 is largely behind us, the Australian Taxation Office (ATO) has moved away from its previously lenient approach to tax debt. The ATO has resumed a more proactive debt collection strategy and is implementing various measures to recover outstanding amounts.
One significant development is that the ATO is now authorised to disclose a business tax debt to credit reporting bureaus. If a company has a tax debt of over $100,000 that is overdue by more than 90 days, the ATO may report this debt to a credit bureau. This can significantly impact a business’s credit profile, making it harder to obtain new financing or extend existing credit terms.
However, businesses that have effectively engaged with the ATO avoid disclosure. This includes entering into a payment arrangement, applying for debt release, or lodging a formal objection. In such cases, the debt will not be reported.
Before disclosing any tax debt, the ATO is required to issue a written notice. The taxpayer then has 28 days to take appropriate action to resolve or address the debt.
In exceptional circumstances—such as serious illness, a family tragedy, or natural disasters—a temporary pause on disclosure may be granted. These situations are assessed on a case-by-case basis at the ATO’s discretion.
Businesses with outstanding tax debts should act promptly to engage with the ATO in order to avoid negative credit consequences. Please contact us to discuss further should this apply to you.
