The Federal Government has released draft legislation and a draft legislative instrument that, if passed, will authorise the ATO to disclose businesses' tax debts to registered credit reporting bureaus (CRBs) where the businesses have not effectively engaged with the ATO to manage their debt.
The draft legislation intends to place tax debts on a similar footing as other debts, to encourage timely payment or engagement with the ATO for businesses that want to avoid having their debt information affect their creditworthiness. Disclosure to CRBs will only be permitted if the ATO has given the taxpayer at least 21 days' notice beforehand.
The draft legislative instrument specifies the following criteria for the type of taxpayer that can be subject to the new disclosure arrangements:
- registered on the ABR;
- has a tax debt, and at least $10,000 of the debt is overdue for more than 90 days;
- is not a deductible gift recipient, not-for-profit entity, government entity or complying superannuation entity;
- is not effectively engaging to manage the tax debt; and
- the ATO has taken reasonable steps to confirm that the Inspector-General of Taxation does not have an active complaint from the entity.
According to the draft legislative instrument, an entity is not effectively engaging to manage its tax debt unless any of the following conditions are met:
- it has entered into an arrangement with the ATO to pay the debt by instalments;
- it has objected against a taxation decision to which the tax debt relates;
- it has applied to the Administrative Appeals Tribunal for review or appealed to the Federal Court against a decision made by the Commissioner to which the tax debt relates.
The disclosure provisions will apply in relation to records and disclosures of information on or after the first 1 January, 1 April, 1 July, or 1 October to occur after the day the Bill receives assent (regardless of when the information was acquired).