TAX DEBT TRANSPARENCY? SAFEGUARDS REQUIRED
The Institute of Public Accountants (IPA) is generally supportive of the proposed tax debt transparency regime but says there are some important safeguards that must be included in the legislative framework.
The proposed legislation will see the disclosure of tax debt information held by the ATO to credit reporting bureaus and agencies. The IPA’s key concern is the holding of data by private credit bureaus after an individual’s tax debt has been cleared.
“The IPA is supportive of the proposed legislation aimed to encourage businesses to pay what they owe,” said IPA chief executive officer, Andrew Conway.
“The legislation will also ensure those failing to honour their tax debts are deprived of any advantages they might have over those complying with their tax obligations in a timely manner.
“We recognise that many small businesses, particularly those struggling to access finance, look to delay payment of their tax obligations.
“There will be a requirement for a credit agency to remove reference to a business tax debtor within two days of the debt being settled but this requirement is left to the administrative powers of the ATO and is not currently in the proposed legislation.
“We argue strongly that this safeguard be legislated and not left to the administration practices of the ATO.
“If a credit agency does not remove the record, it may prevent a small business gaining finance from a lender at a critical time of their business activity.
“Lenders will often seek information in relation to a small business’ tax debt and if this remains on the credit bureau’s books, it will unfairly jeopardise that business when the debt in fact has been paid. This critical safeguard must form part of the legislation,” said Mr Conway.