Disclosure of Tax Debts

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Written by Paul Miller

16 August 2022

Three years ago, we wrote, in an edition of NCI Minute, of the Bill before Parliament to introduce the reporting of tax debts by the ATO. That Bill was passed and now, we can report on the manner in which tax debt reporting will take place.

The ATO’s criteria for reporting will be as follows:

The debtor business has been granted an ABN
The business has one or more tax debts involving, in total, at least $100,000 being overdue by more than 90 days
The business is not in discussions with the ATO to resolve the matter and
There is not an on-going complaint with the Inspector-General of Taxation Ombudsman (IGTO) regarding the ATO’s intention to report the debt.

Before reporting the tax debt, the ATO will first write to the debtor business advising of their intention to disclose the information to authorised credit reporting bureaus and providing 28 days for the business to correct inaccurate information, engage with the ATO regarding plans to pay off the debt, or lodge a complaint with the IGTO.

If there are exceptional circumstances, such as family tragedy, serious illness, or the impact of a natural disaster, the ATO may be also prepared to put a hold on any tax debt disclosure.

Otherwise, the ATO will report the debt to authorised credit reporting bureaus providing the following details:

The ABN of the debtor business
The legal name and registered business name
The type of business (eg, sole trader, partnership, proprietary company) and
The amount of the overdue tax debt.

You should note that if, at any time after reporting the debt, the debtor business no longer meets the ATO reporting criteria, the ATO will require the credit reporting bureaus to remove any reference to the overdue debt.

NCI’s reports will include any ATO reported debts.