The Government has followed up the passage of legislation allowing the tax office to release details of tax debts to credit reporting agencies, with the release of a tax administration declaration that spells out the taxpayers who will be affected by the new rules.
Under a bill passed last October, Treasury Laws Amendment (2019 Tax Integrity and Other Measures No 1) Bill 2019, tax debt is put on a similar footing to other debts.
Under normal circumstances, it is an offence for a taxation officer to disclose protected information that has been acquired by them as a taxation officer.
The government’s rationale is that credit providers and businesses will have a more complete picture of the creditworthiness of a business.
The information memorandum accompanying the bill says the measure will reduce any unfair advantage obtained by businesses that do not pay their tax on time and will encourage taxpayers to engage with the ATO to manage their tax debts.
Under previous arrangements, the first time creditors may have learned that a business had an overdue tax debt was after the ATO commenced legal action to recover the debt.
The ATO must give 21 days’ notice before disclosing tax debt information of a business to a credit reporting agency, such as Equifax and illion.
The declaration sets out the limitations of the new power. A business must have owed the tax office at least $100,000 for more than 90 days and not engaged effectively with the ATO to manage the debt.
The information cannot be disclosed if the taxpayer is taking action in accordance with the law to manage the tax debt. The taxpayer has a right to lodge an objection with the Inspector-General of Taxation about the information being disclosed.
The disclosure rule does not apply to complying superannuation funds, registered charities and government entities.
The declaration takes effect on 21 February.