ATO no longer prepared to be viewed as a line of credit.

In our late-August 2021 blog edition, we advised the ATO will begin to send out orange warning letters to business with over $100,000 in tax debt, advising their intent to disclose the debt to credit reporting bureaus. Click here to view our August blog.

It has now been reported that several small and medium-sized enterprises (SMEs) have received the ATO’s notification of intent. It is vital that businesses get ahead of the ATO’s crackdown by entering and maintaining a payment plan for their tax debts and communicating regularly with their creditors.

If businesses have any pipeline work that will provide future cashflow, it is suggested that you communicate this with your creditors and link future cashflow to paying them.

Previously, some businesses have used the tax office like a “line of credit” by not paying their tax obligations on time. Now, the ATO is no longer prepared to be viewed as such. It is highly recommended that businesses do not continue with this practice as it is very likely to have an adverse effect on their credit rating and insurance limits. It would also make it far more difficult to maintain or extend credit terms with suppliers.

If you or your business has an outstanding tax debt with the ATO that exceeds $100,000 we strongly recommend that you get on the front foot with the ATO and enter into a payment arrangement to avoid an orange warning letter being issued.

If we receive an orange warning letter on your behalf, we will be in touch with you to discuss your obligations.

If you need further information about the contents of this blog or our other editions, please contact us.