The government in a bid to increase transparency of tax debt and to provide a true picture of credit worthiness of businesses has released exposure draft legislation for consultation that will allow the Tax Office to disclose business tax debts to credit reporting bureaus where the businesses have not effectively engaged with the ATO to manage their debt.
For most businesses that pay their tax bills as and when they fall due, this is not of concern but for those entities that have ABNs with tax debts of over $10,000 overdue for more than 90 days, this is about time they get their tax affairs sorted and managed.
One of the first signs of a business not being able to manage its finances is when it starts falling behind on paying its tax debts so this is a good piece of legislation for small businesses who need to continually look for new business but don't always have enough information to determine if a new client is creditworthy or not. This law will provide useful information to businesses that are proving credit to new customers or are increasing the credit limits of existing customers.
For those businesses that do the right thing, they need not worry. Those that try and take unfair advantage by not paying their debt and using the money in their business instead, be aware!
By Suresh Rajani
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