From 1 July 2017, the Government has announced that it will allow the Australian Taxation Office (ATO) to disclose to Credit Reporting Bureaux the tax debt information of businesses that “have not effectively engaged with the ATO to manage these debts”.
The measure will initially only apply to:
- businesses with ABNs
- tax debt of over $10,000 that is at least 90 days overdue
- not under arrangement, payment plan or in dispute.
Why is the government taking this action?
In the current economic climate, the ATO has been under pressure to move faster to recoup escalating tax debts. The ATO had previously allowed companies to accumulate more than $345,000 in back taxes before taking legal action.
How will this affect your ability to borrow?
Most banks will not lend you money if you have a tax default on your credit file. It is important to avoid such defaults when you consider they will remain on your Credit Report for 5 years.
Whilst entering into an agreement with the ATO, may avoid a credit default, the chances are you will likely;
- Be subject to high-interest changes on the debt to the ATO
- Limit your borrowing capacity or purchase price
- Reduce your ability to qualify for a loan with most lenders
What are your options?
At Sanford Finance we have several lending options to help you:
- Payout your Tax debt and avoid a tax default
- Reduce your rate and monthly commitments
- Increase your borrowing capacity, by consolidating your Tax debt to home loan terms and rates.
So if you struggling with a daunting tax debt and want to discover how we can improve your financial situation, call us today on 02 9095 6888!