ATO Disclosing Debt to Credit Reporting Agencies

Since February 2020, the ATO have had the power to disclose the details of business taxpayers with overdue debt to credit reporting agencies. This could have a major effect on a businesses cash flow once trade creditors become aware.

Who Can They Report?

The ATO can disclose to Credit Reporting Agencies the details of taxpayers that meet all of these criteria:

  • they have an ABN
  • they have tax debts of greater than $100,000, which are over 90 days overdue; and
  • they have failed to actively engage with the ATO regarding the repayment of this debt.

The ATO only report on the entity holding the ABN. So in the case of a registered company, it’s just the company, not the company’s directors.

What Does That Mean?

The ATO can include the following types of debt in the $100,000 threshold:

  • income tax debts
  • activity statement debts, for example, GST, Pay as You Go Withholding (PAYGW)
  • superannuation debts
  • fringe benefits tax debts, and
  • penalties and interest charges.

The ATO considers a taxpayer to have ‘effectively engaged’ with it when they:

  • have a payment plan in place and are meeting the terms of the payment plan
  • have an active objection against a taxation decision to which its tax debt relates
  • have an active review with the Administrative Appeals Tribunal (AAT) or to the Court against a decision
  • have an active complaint lodged with the Inspector-General of Taxation about the tax debt that is, or could be, the subject of an investigation.

What is the Disclosure Process?

When the ATO has selected a business that has met the disclosure criteria, an orange-coloured warning letter will be issued, called an “Intent to Disclose” Notice.

The notice will tell you what steps you can take to avoid your tax debt information being reported.

The notice gives you 28 days to take action before Credit Agencies are notified.

If you’ve received an intent to disclose notice, give us a call for free expert advice.

Information Centre