Earlier this year the Federal Government announced its plans to enable the ATO to disclose small business tax debt information to credit reporting agencies. These rules commenced on July 1st and it could have far reaching consequences for your business.
The measures will initially apply to businesses with Australian Business Numbers and tax debts of more than $10,000 that are at least 90 days overdue. Small businesses make up the majority (65%) of taxpayers with debts so the ATO has decided this is a key area of focus with 72% of small business tax liabilities paid on time.
The impact of a credit agency report can be severe resulting in a small business being unable to trade due to supplier restrictions or banks using the information to default loans. It can also reduce borrowing power or even the ability to qualify for a loan in the future with the default recorded on your credit file for five years. This can be particularly harsh as small businesses have cash flow problems from time to time that aren’t a long term issue but more around timing, particularly in relation to debtor payments.
The good news is that First Class Finance can help as there are lenders that will look at financing ATO debt and we have experienced brokers all over the country skilled in handling such transactions. Each will view your situation differently depending on the cause of the tax debt which could be simply be an Accountant error, tax returns not having been lodged or a larger than usual Capital Gains Tax bill. It may even be possible to obtain a loan approval without up to date tax returns with alternative income evidence such as your BAS, bank account statements or an accountant letter.
With over 50 lenders on our panel First Class Finance are ideally positioned to help and we certainly understand that this can be a very stressful situation. Let us do the worrying on your behalf!