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  • Consultation paper: The ATO's administrative approach to the disclosure of business tax debt information to credit reporting bureaus

    Consultation on this paper closed on 6 September 2019. Refer to Disclosure of business tax debts content under new legislation.

    Your feedback

    This paper invites your feedback on the ATO's administrative approach to the Disclosure of Business Tax Debt information to credit reporting bureaus.

    Closing date for comment: 6 September 2019.

    Provide feedback by email to: TaxDebtTransparency@ato.gov.au

    Contact officer: Tara Mclachlan, Director, Operational Policy, Assurance and Law Phone (07) 3149 5339.

    We encourage you to raise any other relevant issues or specific concerns about matters discussed in this paper. Your responses may be made available to the public on the ATO website unless you indicate that you would like all or part of your response to remain in confidence. Automatically generated confidentiality statements in emails do not suffice for this purpose. Confidential elements should be marked or provided in a separate document.

    Purpose of paper

    The purpose of this paper is to facilitate the consultation process between the ATO, businesses and credit reporting bureaus on our administrative approach to the Disclosure of Business Tax Debts measure.

    While this document helps explains some aspects of the proposed law and draft legislative instrument, the focus is in the ATO’s proposed administrative approach.

    Background

    In the 2016–2017 Mid-Year Economic and Fiscal Outlook, the Government announced its intention to allow the ATO to report to credit reporting bureaus (CRBs) the tax debt information of entities that consistently do not engage with the ATO to manage those tax debts.

    The measure was introduced to Parliament in the Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019 on 24 July 2019 and Treasury released a draft Legislative Instrument on the class of entities that the measure applies to for consultationExternal Link on 24 July 2019.

    The Bill has been referred to Senate Economics Legislation Committee with a report due by 5 September 2019External Link.

    The ATO's administrative approach to the disclosure of business tax debt information to credit reporting bureaus

    Disclaimer

    This document outlines how the Commissioner of Taxation (the Commissioner) intends to administer the Government’s announced Disclosure of Business Tax Debts measure.

    While this document helps explains some aspects of the proposed law and draft legislative instrument, the purpose is solely to facilitate the consultation process between the Australian Taxation Office (ATO), businesses and credit reporting bureaus on our administrative approach to the Disclosure of Business Tax Debts measure. It should not be taken as representing either an ATO view or compliance approach.

    All content within this document is subject to consultation and should not be relied upon until published as public guidance.

    Introduction

    1. The ATO recognises the important role businesses play in the Australian economy. When an entity avoids paying its tax debts it can have a significant impact on other businesses, employees, contractors and the wider community.
    2. In the 2016–2017 Mid-Year Economic and Fiscal Outlook, the Government announced its intention to allow the ATO to report to credit reporting bureaus (CRBs) the tax debt information of entities that consistently do not engage with the ATO to manage those tax debts. The ATO is not currently authorised to report this information under the confidentiality of taxpayer information provisions.
    3. The purpose of allowing the ATO to report an entity’s tax debt information to CRBs is to:
      • support more informed decision making within the business community by making large overdue tax debts more visible. This will allow businesses and credit providers to make a more complete assessment of the creditworthiness of an entity. Currently, the first time creditors may learn that an entity has an overdue tax debt is after another creditor or the ATO commences legal action to recover the debt
      • reduce the unfair advantage obtained by entities that do not pay their tax on time and do not engage with the ATO in managing their tax debts. These entities may have a competitive advantage over entities who comply with their tax obligations
      • encourage entities to engage with the ATO to manage their tax debts and, where an entity is unable to pay a tax debt in full by the due date, enter into a sustainable payment plan that is agreed between the ATO and the entity.
       
    4. The Disclosure of Business Tax Debts measure permits, but does not require, the ATO to report the tax debt information of entities to CRBs. This is subject to several safeguards.
    5. There are a number of ways an entity can engage with the ATO to prevent the reporting of its tax debt information to CRBs. The aim is to encourage entities to engage in the management of its tax debts. This is expected to positively influence payment behaviour and, in turn, limits the number of entities the ATO reports.
    6. The ATO will publish public guidance explaining how this measure will be administered, who it will affect, and how to avoid having debts that will be reported.
    7. This document provides practical guidance on:
      • the phased implementation
      • whose tax debt information may be reported
      • how an entity will be notified before its tax debt information is reported
      • how an entity can prevent its tax debt information from being reported
      • how an entity can request an ATO review before its tax debt information is reported
      • how an entity can make a complaint to the Inspector-General of Taxation about the ATO’s proposed reporting of its tax debt information
      • when the ATO may report an entity’s tax debt information
      • what tax debt information will be reported
      • who tax debt information will be reported to
      • how long tax debt information will remain on an entity’s credit report, and
      • what to do if tax debt information is reported incorrectly or in error.
       

    Phased implementation of the measure

    1. Implementation will occur gradually. As part of the gradual implementation, the initial phase will focus on raising community awareness of the measure and its implications. During this time, the ATO will build awareness of the measure through communication activities such as newsletters, articles, forums and speeches.
    2. Under the ATO’s phased implementation approach, the measure will be implemented gradually to ensure systems, safeguards and processes are robust. Initially only companies that meet the criteria below and who have significant high risk tax debts will be reported. This will provide additional time for other entities to become aware of the new measure, recognising the impact of reporting on business activities and personal affairs.
    3. Gradually, implementation will be expanded to other entity types such as partnerships, trusts and sole traders. The measure does not apply to individuals who do not have an Australian Business Number (ABN).

    Whose tax debt may be reported?

    The criteria for reporting tax debt information

    1. The proposed law and draft legislative instrument sets out certain criteria that must be met before an entity’s tax debt information can be reported. The ATO will be permitted, but not required, to report the tax debt information of an entity to CRBs where the entity meets all the following reporting criteria:
      • Criterion one: the entity has an ABN (1) and is not an excluded entity (the ABN and excluded entity test), and
      • Criterion two: the entity has one or more tax debts, the total of which is at least $100,000 that has been due and payable (overdue) by more than 90 days (the debt threshold test), and
      • Criterion three: in determining whether an entity has debts that meet the debt threshold test exclude tax debts that the entity has engaged with the ATO to manage (the effective engagement test), and
      • Criterion four: the entity does not have an active complaint with the Inspector-General of Taxation concerning the proposed reporting or reporting of the entity’s tax debt information.
       
    2. Even where an entity satisfies the above criteria for reporting, the ATO may decide not to report its tax debt information if the entity is experiencing exceptional circumstances (see exceptional circumstances below).
    3. The reporting criteria limit the scope of the ATO’s discretion to report an entity’s tax debt information. This recognises there may be serious consequences for an entity as a result of having its tax debt information reported to CRBs.
    4. Additionally, the reporting criteria operate to clearly define the entities whose tax debt information is eligible for reporting. The reporting criteria ensure only disengaged entities carrying sizable overdue tax debts will have their tax debt information reported. In this regard, the reporting criteria operate to only allow reporting when it is a proportionate response, having regard to the particular entity’s circumstances and the risk its tax debt represents to other businesses and the wider community.

    Criterion one: The ABN and excluded entity test

    1. The first criterion an entity must satisfy is that it has an ABN and the entity is not an excluded entity. Only entities currently registered with the Australian Business Register with an ABN will satisfy this criterion.
    2. An entity who has an ABN demonstrates, as part of the registration process, that it is, or is preparing to, carry on a business or enterprise in Australia. Accordingly, other businesses and people looking to engage with that entity may want to be informed of its creditworthiness.
    3. There are four types of excluded entities. These entities are excluded on the basis that, typically, the main or predominant purpose of these entity types is not the pursuit of profit for its members or shareholders.
    4. The following entity types are excluded:
      • a deductible gift recipient
      • registered charity
      • a government entity, and
      • a complying superannuation entity.
       

    Criterion two: The debt threshold test

    1. The second criterion is that an entity must have one or more tax debts, the total of which is at least $100,000 that have been due and payable (overdue) for more than 90 days.
    2. An entity’s total tax debts will be considered including:
      • 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.
       
    3. Where an entity has multiple tax debts across different ATO accounts, they will be added together to determine if the entity’s total overdue tax debt meets the debt threshold test.
    4. Entities have a period of time before payment of a tax liability becomes due. Once the due date for payment has passed, the ATO will commence its debt recovery processes. These processes may vary depending on an entity’s past compliance history but in all cases will involve the ATO attempting to make contact with the entity several times.
    5. This recovery activity seeks to engage the entity to address its overdue tax debts in a timely manner. The ATO will only consider reporting an entity’s tax debt information where recovery activities have not resulted in effective engagement of a tax debt.
    6. In determining whether an entity meets the debt threshold test, only those debts where the entity has not effectively engaged with the ATO will be considered (see effective engagement below).
    7. Information on how to find out the balance of an entity’s overdue tax debts can be found at How much you owe.

    Example 1: Applying the debt threshold test - Scenario 1

    Example 1 Pty Ltd operates an early learning centre. Example 1 Pty Ltd has an activity statement debt of $80,000 that was due 100 days ago and a superannuation guarantee charge debt of $30,000 that was due 130 days ago.

    Example 1 Pty Ltd has a total tax debt of $110,000 which has been overdue for more than 90 days. Therefore, Example 1 Pty Ltd meets the debt threshold test.

    End of example

     

    Example 2: Applying the debt threshold test - Scenario 2

    Example 2 Pty Ltd operates an automobile smash repairs business. Example 2 Pty Ltd has an income tax debt of $750,000 that was due 95 days ago and an activity statement debt of $150,000 that was due 30 days ago.

    Example 2 Pty Ltd has a total tax debt of $900,000, of which $750,000 is more than 90 days overdue. Therefore, Example 2 Pty Ltd meets the debt threshold test.

    End of example

     

    Example 3: Applying the debt threshold test - Scenario 3

    Example 3 Pty Ltd operates a mattress retail business. Example 3 Pty Ltd has an activity statement debt of $90,000 that was due 100 days ago and an income tax debt of $700,000 that was due 30 days ago.

    Example 3 Pty Ltd has a total tax debt of $790,000. However, of its total tax debt, at least $100,000 is not more than 100 days overdue. Therefore, Example 3 Pty Ltd does not meet the debt threshold test.

    End of example

    Criterion three: The effective engagement test

    1. In determining if an entity meets the debt threshold test, debts where the entity has effectively engaged with the ATO will not be counted towards the debt threshold. There are a number of ways an entity can effectively engage with the ATO in respect of a tax debt.
    2. An entity will have effectively engaged with the ATO in respect of a tax debt if it:
      • has a payment plan in place (2) and is meeting the terms of the payment plan
      • has an active Part IVC objection against a taxation decision to which its tax debt relates (3)
      • has an active review with the Administrative Appeals Tribunal (AAT) or an active appeal to the Court against a decision to which its tax debt relates (4)
      • has an active reconsideration of a reviewable decision which may affect the quantum of a non-complying superannuation fund’s tax debt with the relevant regulator
      • has an active review with the AAT a reviewable decision which may affect the quantum of a non-complying superannuation fund’s tax debt, or
      • has an active complaint lodged with the Inspector-General of Taxation in relation to the tax debt that is, or could be, the subject of an investigation.
       
    Has a payment plan
    1. An entity will have effectively engaged in the management of a tax debt if it has entered into a payment plan and is meeting the terms of that plan.
    2. The ATO focuses on making it as easy as possible for entities to manage and pay their tax debt, and this includes tailored payment plans. This ensures that overdue tax debts can be managed sustainably. There are a number of ways to request a payment plan. Information about payment plans can be found at Help with paying.
    3. The individual circumstances of the entity will be considered, including its capacity to pay the proposed amounts and any steps taken, or proposed to be taken, to mitigate the risk. The ATO may also consider the entity’s past history, including any defaulted arrangements and late lodgements. More information may be required before accepting a payment plan. In these circumstances, a reasonable period of time will be allowed to provide that information.
    4. When an entity enters into a payment plan for its tax debt, the entity agrees to the terms of the payment plan which include, for example, making the scheduled payments on time and lodging and paying all future liabilities on time. If an entity is in a payment plan in respect of a tax debt and is meeting the terms of the payment plan, that tax debt will not be considered when determining whether the entity meets the debt threshold.
    5. If an entity fails to meet the terms of a payment plan (such as not making scheduled payments or failing to lodge and pay all future liabilities on time), the entity may become eligible for reporting as it is no longer effectively engaged. The entity may be able to remedy the default or negotiate a new payment plan depending on its circumstances, including its compliance history. If the entity has contacted the ATO and is remedying the default or is negotiating a new payment plan, the ATO will not count this debt towards the debt threshold during this period.
    6. However if a new payment plan has not been entered into after a reasonable period and the tax debt remains, the tax debt will be considered when determining whether the entity meets the debt threshold.

    Example 4: Payment plan as effective engagement

    Example 4 Pty Ltd has a total tax debt of $150,000. Example 4 Pty Ltd enters into a payment plan with the ATO to make regular payments to pay the total debt in full over 12 months.

    Example 4 Pty Ltd is meeting the terms of the payment plan. Therefore, the debt is excluded from the debt threshold. As Example 4 Pty Ltd does not meet the debt threshold test, the ATO will not report Example 5 Pty Ltd’s tax debt information.

    In month six of the payment plan, Example 4 Pty Ltd does not make the scheduled payment. The ATO notifies Example 4 Pty Ltd that it has defaulted. Example 4 Pty Ltd contacts the ATO 5 days after receiving this notification, and negotiates a new payment plan which is accepted by the ATO.

    Example 4 Pty Ltd is considered to be effectively engaged in respect of the $150,000 tax debt and therefore this debt is not counted towards the debt threshold.

    End of example
    Lodged a Part IVC objection, requested a review in the AAT, appealed to the Courts against a decision, or requested a review with the regulator to which the tax debt relates
    1. An entity will have effectively engaged in the management of a tax debt if it is in the process of disputing a decision to which the tax debt relates.
    2. Depending on the circumstances, the entity may be able to dispute an assessment, determination, notice or decision it receives by lodging a Part IVC objection. If the entity is dissatisfied with an objection decision, it may apply to the AAT for a review of the decision, or appeal to the Federal Court. Information on how to seek a review or object to an ATO decision can be found at Dispute or object to an ATO decision.
    3. An entity’s tax debt relating to the dispute is excluded from the debt threshold while:
      • the objection is being decided
      • the review or appeal is pending, or
      • the entity has a right to a review or appeal of a decision.
       

    Example 5: Disputing a tax liability

    Example 5 Pty Ltd had its 2018 income tax assessment amended following an audit. This resulted in an additional $200,000 income tax liability. Example 5 Pty Ltd lodged a Part IVC objection against the amended assessment.

    While the objection is being determined, the ATO will not count Example 5 Pty Ltd’s income tax liability of $200,000 toward the debt threshold.

    If Example 5 Pty Ltd is dissatisfied with the objection decision, it has 60 days to apply to the AAT for a review of the decision or appeal the decision in the Federal Court. The ATO will not count the $200,000 towards the debt threshold during the 60 day period that Example 5 Pty Ltd can seek a review, or if a review or appeal is lodged.

    As this is the only tax debt Example 5 Pty Ltd has the ATO will not report its tax debt information to a CRB while the dispute is ongoing.

    However, the ATO may report the $200,000 tax debt after 60 days if an application for review or appeal is not lodged and the other reporting criteria are met.

    End of example
    Lodged a complaint with the Inspector General of Taxation in relation to a tax debt
    1. If an entity has lodged a complaint with the Inspector-General of Taxation (IGT) in relation to a tax debt, that debt will not count towards the debt threshold while the complaint is active.
    2. The office of the IGT was set up as an independent statutory agency in 2003. Accordingly, it is independent from the ATO. The IGT can assist an entity to address a complaint about the administrative actions of the ATO. Generally, administrative actions relate to the conduct of the ATO in its interactions with an entity, including the policies and procedures which guide these actions. They do not include decisions such as how much tax an entity has been assessed to pay.
    3. ‘Administrative action’ is a broad term that generally covers the fairness and reasonableness of the ATO’s approach in dealings or interactions with an entity.
    4. For information on how to make a complaint to the IGT see how to make a complaint to the IGT below.

    Example 6: Active complaint with the IGT about a tax debt

    Example 6 Pty Ltd had its 2018 income tax assessment amended following an audit. This resulted in an additional $250,000 income tax liability. Example 6 Pty Ltd lodged an objection against the amended assessment however, the objection was disallowed and Example 6 Pty Ltd remained liable to the additional $250,000.

    On 15 November 2019, Example 6 Pty Ltd lodges a complaint with the IGT in relation to the tax debt of $250,000 because it believes that the ATO had not taken into account relevant information.

    On 23 November 2019, in considering whether Example 6 Pty Ltd meets the reporting criteria, the ATO consults the IGT. The IGT advises that Example 6 Pty Ltd has lodged a complaint in respect of the additional $250,000 which is being investigated by the IGT.

    While the IGT complaint regarding the tax debt is active the $250,000 is excluded from the debt threshold.

    As this is the only tax debt Example 6 Pty Ltd has, it does not meet the reporting criteria and the ATO will not report its tax debt information to a CBR while the complaint is active.

    End of example

    Criterion 4: Does not have an active complaint with the IGT about the reporting of tax debt information

    1. The fourth criterion is that an entity must not have an active complaint with the IGT concerning the ATO’s intention to report the entity’s tax debt information.
    2. The ATO will consult the IGT before it notifies an entity of the ATO’s intention to disclose the entity’s tax debt information, and again before an entity’s tax debt information is first reported. This consultation is to establish if an entity has made a complaint to the IGT about the ATO’s intention to report the entity’s tax debt information.
    3. The ATO will not report an entity’s tax debt information where the IGT is investigating, or is intending to investigate, a complaint from the entity about the ATO’s intention to report its tax debt information.

    Example 7: Active complaint with the IGT about the reporting of tax debt information

    On 1 July 2020, Example 7 Pty Ltd receives a notice advising that the ATO intends to report its tax debt information to CRBs because it satisfies the criteria for reporting.

    On 15 July 2020, Example 7 Pty Ltd lodges a complaint with the IGT regarding the ATO’s intention to report its tax debt information.

    On 23 July 2020, the ATO consults the IGT. The IGT advises that Example 7 Pty Ltd has lodged a complaint about the ATO’s proposed reporting of its tax debt information which is being investigated by the IGT.

    The ATO will not report the tax debt information of Example 7 Pty Ltd while the complaint is active and the investigation is ongoing. The ATO will also take into consideration the IGT recommendation following the investigation in deciding whether the entity’s tax debt information should be reported.

    End of example

    Further administrative safeguards

    Exceptional circumstances

    1. The ATO understands that most entities pay their tax on time and manage their tax debts but that some are unable to do so because of exceptional circumstances outside their control.
    2. Where an entity (or in the case of a company, a representative such as a director) is experiencing exceptional circumstances that is impacting on its ability to pay its tax debts, it may be able to claim a temporary reprieve from having their tax debt information reported. Exceptional circumstances may include family tragedy, serious illness, impacts of a natural disaster and other circumstances.
    3. An entity should contact the ATO if it is experiencing exceptional circumstances that are preventing it from managing its tax debts. The entity may be requested to provide evidence to support its claim. Where an entity claims exceptional circumstances, its tax debt remains payable and the ATO can advise on the options available to pay the debt.
    4. The ATO will not however, report an entity’s tax debt information while it is considered to be experiencing exceptional circumstances.
    5. Exceptional circumstances do not include experiencing cash flow issues or financial hardship. If an entity is experiencing cash flow issues or financial hardship which is preventing it from managing its tax debts, the entity should contact the ATO to discuss the options available.

    How will an entity be notified before its tax debt is reported?

    1. If an entity meets all the reporting criteria and the ATO intends on reporting the entity’s tax debt information, the ATO will notify the entity in writing at least 21 days before reporting its tax debt information for the first time. This provides an entity with an additional 21 days to take action to prevent its tax debt information from being reported.
    2. The notice will advise:
      • that the ATO intends to report the entity’s tax debt information to CRBs
      • that the entity meets all the criteria for reporting
      • the type of information that the ATO intends to report to the CRBs
      • the amount of tax debts payable by the entity at the time the notice is given
      • that the entity has 21 days from the date of the notice to take action to prevent its tax debt information from being reported
      • how to request an ATO review if the entity disagrees that it meets the reporting criteria or is experiencing exceptional circumstances, and
      • how to make a complaint to the IGT in relation to the proposed reporting of the entity’s tax debt information.
       
    3. In the 21 days after the date of the notice, the entity can take action to prevent its tax debt information from being reported by:
      • paying its tax debt
      • effectively engaging with the ATO to manage its tax debt by
        • entering into a payment arrangement
        • disputing the tax debt, or
        • lodging a complaint with the IGT about the tax debt.
         
      • requesting an ATO review if it disagrees that it meets the criteria for reporting, or
      • contacting the ATO to claim, and where necessary demonstrate, it is experiencing exceptional circumstances, or
      • making a complaint to the IGT about the ATO’s intention to report the entity’s tax debt information.
       
    4. Following the conclusion of the 21 days notice period, if none of the above actions have been taken, the ATO will seek to contact the entity by telephone (at the telephone number the entity has provided the ATO) before reporting an entity’s tax debt information to CRBs.

    How to request a ATO review or make a complaint to the IGT about the ATO reporting your tax debt

    How to request an ATO review

    1. As a safeguard, an entity can access an ATO review process if it disagrees that it meets the reporting criteria or if it is experiencing exceptional circumstances. The ATO review process will take place before the ATO reports an entity’s tax debt information. The ATO will not report an entity’s tax debt information while the ATO review process is being conducted. If an entity receives a notice advising that the ATO intends to report its tax debt information and the entity disagrees that it meets the reporting criteria, it can request an ATO review by calling the ATO.
    2. The entity must request an ATO review within 21 days from the date of the notice. There is no application fee for this review and the ATO will not report the entity’s tax debt information while the ATO review is being conducted.
    3. If the entity requests an ATO review, an ATO officer from an independent area of the ATO will conduct a review of the ATO’s decision to issue the notice. The independent ATO officer will review the entity’s circumstances (including any exceptional circumstances) and consider whether it has met the criteria for reporting. The ATO officer will then decide:
      • whether the entity has met the criteria for reporting, and
      • if the entity’s tax debt information should be reported, having regard to whether any exceptional circumstances apply.
       
    4. Once the review is complete, the entity will be advised of the outcome of the ATO review.

    Example 8: ATO review process

    On 1 February 2020, Example 8 Pty Ltd receives a notice advising that the ATO intends to report its tax debt information to CRBs because it satisfies the criteria for reporting.

    On 15 February 2020, Example 8 Pty Ltd requests an ATO review as it disagrees that it meets the criteria for reporting because it lodged a Part IVC objection against its income tax assessment to which the tax debt relates.

    On 26 February 2020, the ATO review is complete. The ATO advises Example 8 Pty Ltd that it does not meet all the reporting criteria as it has effectively engaged with the ATO in managing its tax debts. The ATO will not report the tax debt information of Example 8 Pty Ltd.

    End of example

    How to make a complaint with the IGT

    1. If an entity receives a notice advising that the ATO intends to report its tax debt information to CRBs, the entity may lodge a complaint with the IGT. Information on how to make a complaint to the IGT about the ATO’s intention to report or reporting of an entity’s tax debt information can be found at Making a complaintExternal Link.
    2. The Inspector-General of Taxation is already empowered to conduct investigations into complaints made by entities about the proposed reporting or reporting of their tax debt information as part of the IGT’s existing functions set out in the Inspector General of Taxation Act 2003.
    3. The ATO will not report an entity’s tax debt information if the entity has an active complaint with the IGT concerning the proposed reporting or reporting of the entity’s tax debt information.

    When will an entity’s tax debt information be reported?

    1. Once an entity is notified that the ATO intends to report its tax debt information to CRBs, it will have 21 days from the date of the notice to take action to prevent its tax debt information from being reported. If at the end of the 21 days the entity:
      • has not effectively engaged with the ATO in managing its tax debt
      • has not requested an ATO review of the ATO’s intention to report the entity’s tax debt information
      • is not considered to be experiencing exceptional circumstances
      • has not made a complaint with the IGT about the ATO’s intention to report the entity’s tax debt information
      • still satisfies the criteria for reporting, and
      • the ATO has sought to contact the entity by telephone,
       

      the ATO may report the entity’s tax debt information to CRBs.

    1. Once an entity’s tax debt information has been reported to CRBs, the ATO will send regular updates on the balance of the entity’s overdue tax debts to the CRBs. This will continue until the entity no longer meets the reporting criteria (in which case it will be removed).
    2. The entity will not be notified before the ATO updates the CRBs on the balance of the entity’s overdue tax debts. However, an entity can check its overdue tax debt balance at anytime online. Information on how to find out the balance of overdue tax debts can be found at How much you owe.

    What information will be reported?

    1. If an entity’s tax debt information is reported to CRBs, the ATO will provide the CRBs with the following tax debt information:
      • unique identifiers for the entity, such as the ABN and legal name
      • the balance of the entity’s overdue tax debts at the time of initial reporting
      • regular updates on the balance of the entity’s overdue tax debt until the entity no longer meets the reporting criteria, and
      • a notification when the entity no longer meets the reporting criteria.
       
    2. The tax file number of an entity will not be provided.

    Who will the information be reported to?

    What is a CRB and what will they do with the information?

    1. A CRB is an organisation whose business involves collecting, holding, or using information in order to provide interested parties with information about the creditworthiness of an entity.
    2. The ATO will only report an entity’s tax debt information to CRBs registered with the ATO. The ATO will not receive a fee for any tax debt information reported to CRBs. It will also be a pre-condition to registration that the CRB agrees to the ATO’s reporting terms.
    3. The ATO is providing tax debt information to registered CRBs to enable a more complete picture of an entity’s creditworthiness to be prepared. Interested parties may then use this information to make more informed decisions on the creditworthiness of a business.
    4. It is expected that registered CRBs will include the tax debt information as part of their credit reports which are available for purchase by interested parties (for example, investors, suppliers, and financial institutions). A credit report may include:
      • an aggregate view of an entity’s overall payment behaviour
      • a credit score, and
      • specific details of defaults and legal actions.
       
    5. Each CRB has their own method of calculating credit scores. A credit score is based on an analysis of an entity’s credit file and is provided on a credit report to assist creditors in determining an entity’s creditworthiness. For example, a new supplier may access a credit report to decide whether or not to extend credit terms to a business.

    Registration of CRBs

    1. The ATO will only provide tax debt information to registered CRBs. A CRB will be a registered CRB once they have entered into an agreement with the ATO detailing the terms of the reporting.
    2. To ensure transparency, the ATO will prepare and maintain a public register of registered CRBs. This register will be published on www.ato.gov.au.
    3. In choosing whether or not to enter into an agreement with a CRB, the ATO will consider a number of factors including (but not limited to):
      • whether the CRB is compliant with its Australian taxation obligations (including being up-to-date on relevant lodgments and payment of tax debts)
      • the practices, procedures and systems a CRB has in place to deal with and report tax debt information
      • whether the CRB has robust dispute resolution and complaints processes
      • the CRB’s policy on retention periods for tax debt information, and
      • the CRB’s administration capabilities and processes.
       
    4. The agreement between the ATO and a CRB will set out the terms of the arrangement including (but not limited to):
      • the open and transparent management of tax debt information
      • the transfer and matching of data provided by the ATO
      • the integrity of tax debt information stored on the CRB’s systems
      • the removal of tax debt information where an entity no longer meets the criteria within 2 business days of receiving the ATO instruction
      • the correction of tax debt information within 2 business days of receiving the ATO instruction, and
      • the requirement to log, report and work with the ATO to resolve issues within agreed timeframes.
       

    How long will tax debt information remain on an entity’s credit report?

    1. The agreement between the ATO and each CRB will provide that an entity’s tax debt information must be removed from its credit report when the entity no longer meets the reporting criteria. Ordinarily, this will be when the entity has paid its tax debt or has engaged with the ATO in managing the tax debt.
    2. If an entity no longer meets the criteria for reporting, the ATO will instruct the CRB to remove its tax debt information from public access and credit reports. The CRB must remove the tax debt information within 2 business days of receiving the ATO instruction. Once this information is removed, CRBs will not be able to prospectively show or use this data in an entity’s credit report or credit history.
    3. This is different to the standard credit reporting industry approach where defaulted debts remain visible on a credit report for a much longer period (generally 5 years).

    Example 9: Removal of tax debts from a CRB’s records

    On 3 March 2021, Example 9 Pty Ltd had its tax debt information reported to a CRB.

    On 7 June 2021, Example 9 Pty Ltd entered into a payment plan to manage all of its overdue tax debts.

    Example 9 Pty Ltd has effectively engaged with the ATO in the management of its tax debt and, as such, no longer meets the criteria for reporting. The ATO instructs the CRB to remove Example 9 Pty Ltd’s tax debt information. The CRB removes Example 9 Pty Ltd’s tax debt information from public access and its credit reports.

    End of example

    What to do if an entity’s tax debt information is incorrectly reported?

    Contact the ATO

    1. If an entity’s tax debt information has been reported incorrectly or in error, an authorised representative of the entity should contact the ATO. The ATO will investigate and determine whether the tax debt information reported by the CRB matches the information the ATO reported to them.
    2. Where an entity’s tax debt information has been reported by the ATO to a CRB in error or incorrectly, the ATO will instruct the CRB to remove or correct the tax debt information within 2 business days. The entity will be notified of any removal or correction made in these circumstances.
    3. Where the correct tax debt information was reported by the ATO to a CRB correctly and the CRB incorrectly reported that information, the ATO will instruct the CRB to rectify the error within 2 business days. This will be a condition of the ATO’s agreements with the registered CRBs. An entity will be notified once the CRB corrects its records.
    4. If the ATO determines that an entity’s tax debt information was correctly reported to a CRB, and the CRB correctly reported the information, an entity will be notified that its tax debt information has been correctly reported.

    Example 10: Requesting a correction - Scenario 1

    Example 10 Pty Ltd obtains a copy of its credit report from a CRB and notices that it incorrectly reports the amount of the overdue tax debt as $250,000 instead of $200,000. Example 10 Pty Ltd contacts the ATO to advise of the error and requests that the report be corrected.

    The ATO investigates and determines that Example 10 Pty Ltd’s tax debt information was correctly reported to the CRB and that the CRB incorrectly reported that information.

    The ATO instructs the CRB to correct its records within 2 business days.

    End of example

     

    Example 11: Requesting a correction - Scenario 2

    Example 11 Pty Ltd obtains a copy of its credit report from a CRB and believes that it incorrectly reports a tax debt. Example 11 Pty Ltd contacts the ATO to advise that it does not believe it owes the tax debt reported by the CRB.

    The ATO reviews its records and can see that the tax debt is in respect of a default assessment for income tax and has been correctly reported. The ATO notifies Example 11 Pty Ltd that its tax debt has been correctly reported.

    Note: Depending on the circumstances, Example 11 Pty Ltd may be able to lodge a Part IVC objection in respect to the default assessment for income tax which may exclude Example 11 Pty Ltd from reporting.

    End of example

    1 An entity with an ABN is registered in the Australian Business Register under section 11 of A New Tax System (Australian Business Number) Act 1999.

    2 A payment plan is an arrangement with the Commissioner to pay the tax debt by instalments under section 255-15 of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953).

    3 An objection to a taxation decision (within the meaning of section 14ZL of the TAA 1953) in the manner set out in Part IVC of the TAA 1953.

    4 Within the meaning of section 14ZZ of the TAA 1953.

      Last modified: 17 Oct 2019QC 59860