Small Businesses With Outstanding Tax Debts Should Prepare For Looming Disclosure To Credit Reporting Agencies.
In a move that could affect the credit rating of small business owners, the ATO has announced that they will be sharing data with credit agencies pertaining to tax debts from 1st July 2017.
The measures have been worded so that they only apply to debts that are older than 90 days, and greater than $10,000 – however this disclosure could stand to cause significant issues to small businesses and their owners who do not have their tax affairs in order. It is a very real possibility that bank funding could freeze up for those with outstanding tax debts.
If these changes are set to impact upon you or your small business, there are several steps you can take now to mitigate the damage to your credit rating, and improveyour prospects of obtaining finance in the future.
1. Get your tax affairs in order now. Tackle your tax arrears and start paying down any outstanding debts. If needed enter into a payment arrangement with the ATO.
2. Maintain close relationships with you suppliers and be prepared for any tightening of credit. This might mean changing your own payment terms now to anticipate and protect against the anticipated changes.
3. Source alternative funding sources.
4. Sell assets to pay down tax debt in a way that allows you to still have access to the use of those assets.
While these changes are not yet law, and are subject to normal parliamentary review, it’s a good idea to start planning now in preparation for the ATO providing further details on the implementation and administration of this measure.