If you haven’t caught up with the latest news from the world of credit reporting, it’s important to note that, from July 1, 2017, the
Australian Taxation Office (ATO) will inform credit rating agencies of any businesses that have outstanding tax debts.
Given the reality that 65.2% (worth around $12.5 billion) of these late payers are local small businesses, it’s a move that will put some serious pressure on business owners to place a priority on tax debt – ahead of other debts.
The move was announced in the Mid-Year Economic and Fiscal Outlook (MYEFO) and the plan means that the ATO will soon disclose the tax debt information of businesses that are not actively engaged in debt management solutions with the ATO.
If you are in the market for a loan or mortgage and you run a business that has tax debt more than $10,000, the ruling will have a direct impact on your ability to obtain credit.
Repairing Bad Credit
Any bad report on your credit rating is a serous business that is difficult – and time-consuming – to repair.
The first potential issue that this new ruling raises is that, once something like this has been listed on your credit rating, it is a difficult thing to remove.
The second potential problem is the accuracy of the ATO’s tax debt claim – and if they do make a mistake, how will this impact on the repair of your credit file?
It’s important to realise that the initiative will, initially, only apply to businesses with Australian Business Numbers and tax debt of more than $10,000 that is at least 90 days overdue.
As time goes on, though, the ATO may extend the ruling to include other tax debts.
Don’t Limit Your Lending Options
If you have an outstanding tax debt, taking positive action to contact the ATO – or get your accountant to do it on your behalf – is critical. With only a few weeks up your sleeve before the ATO has the powers to list any business debt, working out a repayment arrangement now could be the difference between securing a mortgage or finance application with a good deal, or being penalised by having limited access to a full range of lenders.
Competitive Rates Can Save You Thousands
If you have any concerns, acting sooner, rather than later is recommended. While an experienced mortgage broker can often still help people with shaky credit ratings find finance they need, the more options you have available to you means more opportunities to find a competitive interest rate that could save you thousands of dollars from your home loan over the life of your mortgage – a reality that is worth making an effort to manage a positive credit rating for your future financial wellbeing.
If you need advice for a home loan, business or commercial loan, self-managed super fund loan, or a vehicle or equipment finance loan, speak to a broker at Lending Specialists. We have a wealth of experience under our belt and a robust network to connect you to the right industry professional for the loan you need.
