Did you know your business tax debt could be affecting your credit rating and in turn, your ability to access finance for business growth?

If you’re carrying a sizeable business tax debt, you’ll be interested in this.

What are the recent changes?

Recently the Australian Taxation Office (ATO) agreed to share commercial tax default data with credit reporting agency Equifax in commercial credit reports.

The ATO may report the business tax debt if the business:

• Has an Australian business number (ABN) and is not an excluded entity.
• Has one or more tax debts and at least $100,000 is overdue by more than 90 days.
• Is not engaging with the ATO to manage its tax debt.

Why is the ATO doing this?

As of 30 June 2021, the ATO was owed $24.3 billion in collectable debt from small businesses.

One of the reasons for the disclosure of overdue business tax debts is to reduce the unfair advantage of businesses that don’t pay their tax on time.

What should I do if I have an outstanding business tax debt?

Get in touch with the ATO ASAP.

The ATO won’t report your business tax debt to credit reporting bureaus if you’ve reached out to them about how to manage your debts. Likewise, your tax debt information will be removed from credit reports once you do engage with the ATO.

The ATO may suggest a payment plan or other next steps, depending on your situation.

What are my other options?

We may be able to suggest a range of debt financing solutions to help you repay your debt and avoid copping any additional interest and penalties from the ATO.

If you have equity in residential or commercial properties, you may be able to refinance to unlock funds and pay your tax debts. In this example, you could opt for a longer loan term that makes your repayments more manageable and reduces the pressure on your cash flow.

There may be other ways to finance tax debt even when you don’t have equity in real estate. For example, business assets or equipment could be used as security for tax debt loans.

You could also explore alternative finance solutions such as cash flow loans, lines of credit, invoice factoring or unsecured business loans.

Get in touch to find out more.