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New law for Transparency of Business Tax Debts

New law for Transparency of Business Tax Debts

Jenny Wong discusses the Government's draft legislation to increase transparency of business tax debts.

Jenny Wong

Director, Australian Tax Centre

KPMG Australia


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Recently the Government released exposure draft Treasury Laws Amendment (Tax 3 Transparency) Bill 2018: Transparency 4 of taxation debts. It will allow the Australian Taxation Office (ATO) to report to registered credit reporting bureaus (CRBs) the tax debt information of businesses that do not effectively engage with the ATO to manage those debts.

It seeks to implement the Treasurer’s announcement in the 2016-17 Mid-Year Economic and Fiscal Outlook (MYEFO) that the ATO would disclose businesses with unsettled tax debts over $10,000 that are 90 days overdue, who have not effectively engaged with the ATO.

Highlights of the new legislative framework include:

  • Ensuring that a taxpayer’s tax debt information may only be disclosed to credit reporting bureaus where certain conditions and safeguards are satisfied. 
  • Conditions to be set out in a legislative instrument made by the Minister that establish whether a type of taxpayer can be subject to the new disclosure arrangements, such as the taxpayer being a business with an Australian Business Number, and having a tax debt, of which at least $10,000 is overdue for more than 90 days. 
  • Procedural conditions and safeguards that the Commissioner must satisfy before disclosing a taxpayer’s tax debt information. This ensures the taxpayer is made aware that the Commissioner is considering disclosing their information and affords taxpayers an opportunity to engage with the ATO to prevent their debts from being reported.

The amendments 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 Royal Assent (regardless of whether the information was acquired before, on or after that day).

This is a positive measure for small businesses enabling them to evaluate their dealings with other businesses that may not be paying their tax debts on time. It helps them to avoid incurring losses by assessing the other parties risk and changing their trade terms accordingly.

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