The Credit Impacts of Business Tax Debt
Uh oh. Keeping on top of your debts to the Australian Tax Office, the ATO, has just become even more important. You never know whether a new federal budget is going to bring good news or bad.
It might not be the end of the world but the mid-year update for the federal government’s budget makes life a little more difficult for small businesses, as reported in December 2016 in the Sydney Morning Herald. The ATO is going to start reporting business tax debts to credit reporting agencies.
It’s more of a stick than a carrot, in recognition that tax debts to the ATO have hit a number just a bit over $19 billion. They won’t be going after the small fry… for now. ATO will report tax debts for ABN holders that have debts larger than $10,000 and are overdue by more than 90 days.
If it seems that small businesses are being picked on, it’s because they represent the largest share of taxpayers who have debts: a share of 65.2%. But perhaps worse is the figure that only 72.3% of small business taxes are paid on time. Nassim Khadem reported that small businesses are accounting for a whopping $12.5 billion of the $19 billion figure above and that this is 1.9% higher than last year!
Tax debts on your credit report will make applying for loans more difficult, which could affect the future of your business.
What can you do about it?
Small businesses have been put on notice. No longer does the ATO allow more than $345,000 of debt to build up before they take action, as in the past. Any time you hit $10,000 in debt and start to go into arrears, you need to take immediate action.
Merchant Cash can provide loans to help you pay back the ATO. Don’t get stuck in a cycle of poor communication and frustration. A parliamentary enquiry in 2014 reported that small businesses suffered from intimidation, had mental breakdowns, thought about suicide and went bankrupt, all because of long and difficult situations with the ATO. A business loan is far easier and less stressful!