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  • Disclosure of business tax debts

    The Government introduced a bill on 24 July 2019 which will allow the Australian Taxation Office (ATO) to disclose tax debt information of businesses to registered credit reporting bureaus (CRBs). This bill was referred to the Senate Economic Committee on 25 July 2019. Submissions to the Committee are due by 15 August 2019.

    Treasury have also released a draft Legislative instrument on the class of entities that the measure applies to (submission on the draft legislative instrument are due 21 August 2019).

    Under the proposed law, the ATO will only be able to disclose tax debt information of a business where certain criteria are met. The Commissioner is not obligated to disclose tax debt information and will apply administrative safeguards above and beyond the legislative safeguards in the bill and draft legislative instrument, before reporting a businesses' tax debt information.

    Businesses which are engaging with the ATO to manage their tax debts will not have their tax debt information reported to CRBs.

    The purpose of allowing the ATO to report a businesses' tax debt information to CRBs is to:

    • encourage businesses to engage with the ATO to manage their tax debts and, where an business is unable to pay a tax debt in full by the due date, enter a sustainable payment plan that is agreed between the ATO and the business,
    • support more informed decision making within the business community by making large overdue tax debts more visible, and
    • reduce the unfair advantage obtained by businesses that do not pay their tax on time and do not engage with the ATO in managing their tax debts.

    The ATO will only disclose tax debt information of a business to a CRB under the proposed measure if the business meets all of the following criteria:

    • it has an Australian Business Number (ABN), and is not an excluded entity;
    • it has one or more tax debts, of which at least $100,000 is overdue by more than 90 days;
    • it is not effectively engaging with the ATO to manage its tax debt; and
    • the Inspector-General of Taxation is not considering an ongoing complaint about the proposed reporting of the entity's tax debt information.

    The ATO will notify a business in writing if they meet the reporting criteria and give them 21 days to engage with the ATO and take action to avoid having its tax debt information reported.

    The ATO will only provide information to CRBs under the measure if they are registered with the ATO and have an agreement detailing the terms of the reporting.

    The ATO has separately published a consultation paper focusing on how the ATO intends to administer the measure. The ATO is also seeking feedback on our consultation paper.

    The measure will apply from the date of royal assent and from when the Legislative Instrument is registered.

    Legislation and supporting material

    This change is not yet law and is subject to the normal parliamentary process.

    See also:

      Last modified: 14 Aug 2019QC 51737