Did You Know the ATO Will Soon Be Able to Report Tax Debt to Credit Agencies?
It is estimated illegal phoenix activity costs the Australian economy between $1.8bn and $3.2bn each year. This is no exaggeration and government has made its intentions clear, proposing aggressive new legislative reforms aimed at reducing the impact and burden on the economy.
Definition - Illegal phoenix activity involves transferring assets from an indebted company to a new company to intentionally avoid paying creditors, tax or employee entitlements.
So what’s changed?
Government has announced its intention to pass legislation allowing the ATO to disclose tax debts to registered credit reporting bureaus (CRB). The proposed legislation is awaiting Royal Assent. However, such disclosures are likely to adversely affect a business’s credit rating and ability to access debt funding.