In the 2016-17 Mid Year Economic and Fiscal Outlook the government announced that from 1 July 2017 the ATO will be able to disclose to Credit Reporting Bureaus the tax debt information of businesses that have not effectively engaged with the ATO to manage these debts.
With that date fast approaching, SME funder FactorONE has called on accountants to work with their small and medium business clients to get their tax affairs in order to avoid any funding issues down the track.
FactorONE’s head of debtor finance Wayne Smith believes that the government introduced the change to assist in providing businesses with a more complete credit risk assessment, and help credit managers to identify businesses at high risk.
“While this increases the level of disclosure, accountants need to make their SME clients aware of the impact this move could have on their business,” Mr Smith said.
At the time the MYEFO was released, BDO tax partner Mark Molesworth told Accountants Daily that the increased disclosure capabilities should encourage businesses to pay taxation debts in a more timely manner to avoid affecting their credit rating.
Mr Molesworth believes this demonstrates that the government and the ATO are becoming more serious about ensuring debts are collected in a timely manner.
As a result of this Mr Smith highlighted that banks may tighten up their funding options for SMEs with tax debts.
“This move is likely to have an adverse impact on the credit appetite of the traditional sources of small business funding, and may also make it harder for SMEs to retain credit insurance limits,” Mr Smith said.
“It is also likely to impact on trade credit, meaning where a business could gain trade credit previously, it may not be as readily offered or terms will not be extended, resulting in a potentially significant impact on cash flow.”
Are you thinking of expanding your offering into SMSFs to grow your client base? Become a pro at SMSF fundamentals and make your clients bulletproof with the SMSF Foundations course. Learn directly from Aaron Dunn from Smarter SMSF as he deep-dives into the fundamentals you need to know to successfully undertake your work as an SMSF practitioner. Earn up to 21 CPD hours! Learn more
TRENDING
