The Australian Taxation Office can disclose tax debt information to credit reporting agencies, following the passage of a tax bill last week.
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.
Under the new law, included in Treasury Laws Amendment (2019 Tax Integrity and Other Measures No 1) Bill 2019, tax debt is put on a similar footing to other debts.
The government 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.
Certain conditions must apply. 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.
In a statement, the ATO said: “The Commissioner is not obligated to disclose tax debt information and will apply administrative safeguards above and beyond the legislative safeguards in the bill, before reporting the tax debt information of a business.”