Australian taxes and tax debts are pretty complicated and hard to understand for a naive business owner. In most cases, businesses meeting certain reporting criteria may find that their tax debt information has been disclosed to credit reporting bureaus or agencies. If a business is engaged with the ATO for tax debt management, the debt information will not be reported to the credit reporting bureau.
Criteria For Reporting Business Tax Debts
The eligibility criteria formulated by the ATO to report a business tax debt includes:
- You have an Australian Business Number (ABN)
- You have one or more tax debts up to $100,000 overdue
- You are not engaged with ATO to manage your tax debt
- You don’t have an active complaint reporting your tax debt
Even if you meet the eligibility criteria, there is still an exception for businesses that are excluded from reporting tax debts. An entity is excluded if, it is:
- Deductible gift recipient
- Complying superannuation fund
- Registered charity
- Government entity
Engaging With The ATO To Manage Your Debts
A business debt needs to be reported if the amount meets the $100,000 threshold. A debt is considered to be effectively managed if, you have:
- a payment plan with the ATO and comply with the terms.
- applied for a release from the tax debt.
- an active objection against a taxation decision.
- an active review with the Administrative Appeals Tribunal.
- an active appeal to the Court against a decision relating to the tax debt.
- an active complaint with the Inspector-General of Taxation and Taxation Ombudsman.
Why Is Disclosure Of Business Tax Debt Done?
- To support businesses in making informed decisions
- To make overdue tax debts more visible
- To encourage taxpayers to engage with the ATO to manage tax debts
- To reduce the unfair financial advantage obtained by some businesses
A business may be able to avoid the disclosure of tax debt information for a temporary period of time if it is going through exceptional circumstances that include family tragedy, serious illness or impacts of natural disasters.
At KPG Taxation, our tax accountants in Dandenong can help businesses in filing their tax and super obligations. Contact us anytime for a consultation, and we’ll work with you to find the best solution.