Dean’s Desk – ATO Tax Debt Disclosure

Dean Phillips is the National Manager of FeeSynergy’s Outsourced Accounts Receivable division. His rapidly expanding team provide professional credit management services to many leading accounting and legal firms across Australia.

Read below as he shares topical information and tips and tricks on things credit managers working in professional service firms should know.

ATO Tax Debt Disclosure

My team recently attended an Australian Institute of Credit Management (AICM) hosted webinar with the ATO on the hot topic of Tax Debt Disclosure. This was a very informative webinar and will assist my team to better manage debt recovery from customers (of our accounting and legal clients) who have ATO debt.

Since July 2023, 50,000 businesses with tax debts exceeding $100,000, overdue by more than 90 days, have received notices from the ATO indicating its intent to disclose this information to credit reporting Agencies.  20,000 businesses have been disclosed.

Before the ATO Discloses a debt, they will send the business a written letter detailing the below information:

  • About their intention to report your tax debt to a credit reporting Bureau (such as Equifax)
  • That you meet the criteria for reporting
  • The information that they intend to report
  • What steps to take to avoid your tax debt being reported
  • That you have 28 days from receiving the letter to take necessary steps to clear the debt

The ATO may disclose a client’s tax debt if a business has:

  • An ABN (this includes a sole trader) and isn’t an excluded entity
  • A tax debt of at least $100,000 overdue by more than 90 days
  • Is not effectively engaging with the ATO
  • Doesn’t have an active complaint with the Inspector General of Taxation or Ombudsman

Why Does the ATO Disclose the debt?

  • It increases transparency by making the debt more visible
  • Helps other businesses make informed decisions about who they are dealing with
  • Alerts other creditors and businesses to a debt risk
  • To encourage businesses with a tax debt to engage with the ATO
  • To ensure businesses don’t gain an unfair advantage over other businesses doing the right thing

Of the 20,000 businesses that have had their debt disclosed since July 2023:

  • 582 clients paid their debt in full
  • 3,776 entered into a payment arrangement
  • 2,890 advised of insolvency
  • 228 had their ABN Cancelled

If you would like further information, contact the ATO Disclosure of Business Tax Debts enquiries line on 1300 303 570.

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