The Institute of Public Accountants (IPA) has offered conditional support to the proposed tax debt transparency regime, with the caveat that some important safeguards are included in the legislative framework.
The Institute was concerned that data may be held by private credit bureaus after an individual’s tax debt has been cleared as a result of the regime, as the proposed legislation would see the disclosure of tax debt information held by the Australian Taxation Office (ATO) to such agencies.
The regime would require a credit agency to remove reference to a business tax debtor within two days of the debt being settled. This requirement would not be legislated though and instead left to the ATO’s administrative practices.
IPA chief executive, Andrew Conway, called on the Government to enshrine the safeguard in legislation instead.
“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 has in fact been paid. This critical safeguard must form part of the legislation,” Conway said.