Black Mark For Failure To Pay Taxes

March 10, 2017 eBankruptcy

The mid-year Economic and Fiscal Outlook was recently released by The Federal Government. Enhancements in the integrity of the tax system were announced, allowing the Australian Taxation Office (ATO) to disclose to credit reporting bureau’s the tax debt information of businesses who have not properly engaged with the ATO to manage these debts. As the ATO attempts to reign in over $19billion in overdue taxes, this is a significant new weapon to have in the armoury. Two thirds of the overdue tax bill are owed by small businesses (with less than $2 million per annum turnover).

The proposition is that initially, these changes will only apply to businesses (with an Australia Business Number) that have outstanding tax debts of over $10K and at least 90 days overdue.

The ATO have made several amendments over recent years in attempt to recover overdue tax liabilities, including but not limited to:

  • Changes to the director penalty regime where by directors become automatically liable for certain tax debts, including PAYG withholding and Superannuation Guarantee, where amounts remain unpaid and unreported within three (3) months of the due date for lodgement; and
  • A reduction in the threshold at which it will pursue small businesses that owe tax debts from $300,000 to around $30,000.

Despite these amendments, they have had no actual influence on businesses who are continuing to trade using the tax liability as a source of immediate cash flow finance for their businesses.

Things, however, are about to change, as defaults being recorded on a tax payer’s commercial credit file will have immediate and long lasting consequences to a defaulting tax payer. The default will be recorded as a black mark on the individual tax payer’s commercial credit file that lasts for five years and can pose problems to tax payers who are needing support from current and future financiers and suppliers.

It will now be imperative for businesses with overdue tax debts to engage with the ATO in a timely manner and effectively manage these unpaid taxes. These are weighty ramifications for small and micro businesses.

Should you be experiencing financial distress and unable to attend to the payment of your outstanding tax liabilities, then it is imperative that professional advice be obtained immediately to avoid further ramifications.

Esolvency can help you with Insolvency Reconstruction. If debts are piling and financial distress is setting in- click here for a business health check. We offer low cost liquidation services. Don’t hesitate to contact us  on 1800 ESOLVE or 1800 376 583 to discuss the options that are available to you.