Proposed changes enable ATO to report tax debt
As part of a Treasury Amendment Bill, the ATO would be allowed to inform credit reporting bureaux when a business has a tax debt of over $100,000 that is 90 days overdue and has not agreed on a payment arrangement with the ATO.
In effect, businesses have been using the ATO as a form of business finance by delaying their tax payments. As a result, the ATO has long been viewed as the fifth largest SME lender in Australia, as tax debt has been used as a form of working capital.
Business tax debt not a sign of bad business
Nearly 40% of businesses with a Moula loan are on some form of payment plan with the ATO. This doesn’t mean they’re not viable, growing businesses. Many successful businesses have effectively managed their tax debt using the payment arrangements available.
Changes create opportunities for finance brokers
When the new rules are implemented, businesses with large outstanding tax debts will be at risk of damaging their credit ratings and obtaining business finance in the future. This will motivate them to move away from relying on the ‘Bank of ATO’.
As businesses will need more appropriate forms of finance to avoid the risk of lowering their creditworthiness, finance brokers can step in to offer options that better suit their needs, including unsecured business loans from Moula.