Small business tax debt and ATO credit reporting

If you have a small business tax debt you can't pay on time, the ATO expects you to contact it before the due date and agree how the debt will be paid. If you don't engage, it can take firmer action, including reporting a business tax debt of at least $100,000 that is more than 90 days overdue to credit reporting bureaus, where lenders and suppliers can see it.

We act for small businesses, their directors and their accountants across Australia on ATO debts as part of our work as tax debt lawyers.

How is the ATO dealing with small business tax debt now?

In 2023 the ATO said it was returning to business-as-usual debt collection after the pandemic, and that by July 2023 it had sent notices of intent to disclose business tax debts to more than 22,000 businesses (ATO media release, ATO reminds businesses to pay before they disclose their debts, last updated 7 October 2023). It also said it would act quickly on new self-assessed business debts, keeping payment plans and interest remission for those who genuinely need them (ATO speech, Addressing collectable tax debt, Tax Institute Tax Summit, 7 September 2023).

Its current guidance says it is more likely to take firmer action when a taxpayer (ATO, Firmer action we may take, last updated 17 September 2026):

• refuses to engage, or keeps ignoring SMS and letter reminders,
• repeatedly defaults on payment plans,
• doesn't take steps to resolve its financial situation, or
• is a business choosing to let GST, PAYG withholding and employee super go unpaid.

Firmer action includes garnishee notices to your bank, customers or merchant facility provider, director penalty notices that let the ATO recover a company's unpaid PAYG withholding, GST and super guarantee charge from its directors personally, and disclosure to credit reporting bureaus. Beyond that, the ATO can start legal recovery action.

Delay is also expensive. General interest charge (GIC) accrues daily and compounds (Taxation Administration Act 1953 (TAA), s 8AAC), and GIC incurred in income years starting on or after 1 July 2025 can't be deducted (Income Tax Assessment Act 1997, s 26-5(1A)).

When can the ATO report a business tax debt to credit bureaus?

Tax secrecy rules generally make it an offence for ATO officers to disclose information about your tax affairs (TAA Sch 1 s 355-25). Section 355-72 of Schedule 1 creates an exception for disclosures to credit reporting bureaus (often called credit reporting agencies), but only for entities in a class the Minister has declared. Section references below are to Schedule 1 of the TAA unless we say otherwise.

The class is set by the Taxation Administration (Tax Debt Information Disclosure) Declaration 2019 (the Declaration). A business can be reported only if it meets all of these criteria:

Criterion	What it means	Source
ABN	Registered in the Australian Business Register, other than as a deductible gift recipient, complying super fund, registered charity or government entity	Declaration s 6(1)(a)
Debt threshold	One or more tax debts totalling at least $100,000 that have been due and payable for more than 90 days	Declaration s 6(1)(b)
Not engaging	Debts the business is managing with the ATO or formally disputing are left out of that total	Declaration s 6(2)
No complaint about the disclosure	The ATO isn't aware of an active complaint to the Inspector-General of Taxation about the proposed disclosure	Declaration s 6(1)(c)

Points that are easy to miss:

• It isn't limited to small businesses. Companies, trusts, partnerships and sole traders with an ABN can all be reported, each on its own debts.
• Only debt more than 90 days overdue counts, however large the recent debts are.
• For a sole trader, the better view is that all the individual's tax debts count, not just those from the business. The Declaration counts every tax debt of the entity with the ABN, and a sole trader and the individual are the same entity. So the whole of the individual's income tax counts, including tax on wages or investments, and so does any other tax debt the individual owes. The ATO hasn't published how it applies this in practice.

For example, suppose a company owes $60,000 from a BAS due four months ago and $50,000 of income tax due a month ago (ignoring interest, which also counts as tax debt). Only $60,000 is more than 90 days overdue, so it is below the threshold for now. If nothing is paid or arranged, a little over two months later $110,000 is more than 90 days overdue and the company meets the debt test.

What counts as engaging with the ATO?

The Declaration leaves a tax debt out of the $100,000 total to the extent that (s 6(2)):

1. A payment plan covers it and you're keeping to it. The plan must be an instalment arrangement under s 255-15. If you default, the debt counts again until the default is fixed or a new plan is agreed (Explanatory Statement to the Declaration).
2. You've applied for release. A first application for release from the debt on serious hardship grounds (s 340-5), not withdrawn, counts until 60 days after notice of the decision is served. Release is only available to individuals and the trustees of deceased estates, not companies, and doesn't cover GST or PAYG withholding (ss 340-5(3) and 340-10). See release from tax debt.
3. You've objected. A valid objection under Part IVC of the TAA against the decision behind the debt, not withdrawn, counts until 60 days after notice of the objection decision is served.
4. A review or appeal is under way. Tribunal review of the objection decision, or a Federal Court appeal, counts until the proceedings end. The Declaration still refers to the AAT, but the transitional law reads references to the AAT in existing instruments as references to the Administrative Review Tribunal (ART), which replaced it on 14 October 2024 (Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024, Sch 16 item 13).
5. You've complained to the Inspector-General about the debt, and the ATO is aware of the active complaint.

A plan can cover part of the debt, and only the rest counts. For example, if $150,000 is more than 90 days overdue and $100,000 of it is under a plan you're keeping to, the remaining $50,000 is below the threshold. An objection only protects the debt it relates to, so objecting to an income tax assessment doesn't take an unrelated BAS debt out of the total (see ATO objections).

The ATO also says it may temporarily hold off reporting where a business faces exceptional circumstances outside its control, such as a family tragedy, serious illness or a natural disaster. Cash-flow problems or financial hardship generally aren't enough on their own (ATO, Disclosure of business tax debts, last updated 29 October 2026).

How long do you have after a notice of intent to disclose?

Before the first disclosure, the ATO must consult the Inspector-General of Taxation, give the business a written notice, and wait until 28 days have passed after the notice was given (s 355-72(1)(e)). The notice must be served on the business and must explain what information will be disclosed, why the business is in the declared class and any steps it can take to fall outside it, the tax debts payable at the time, and how to complain about the proposed disclosure (s 355-72(3)).

The ATO's guidance speaks of 28 days from receiving the notice, but the Act runs them from when the notice is given, which can be before anyone reads it. To be safe, count from the date on the notice, and don't wait for a further warning: the Act requires none before the ATO reports.

Use that time to stay off a credit report: pay enough that less than $100,000 is more than 90 days overdue, agree a payment plan with the ATO and keep to it, or lodge a valid objection if the assessment behind the debt is wrong.

If you think the ATO's figures or decision are wrong, raise it with the ATO straight away and consider a complaint to the Inspector-General of Taxation (also called the Tax Ombudsman). While the ATO is aware of an active complaint about the disclosure, the business is outside the class (Declaration s 6(1)(c)). The TAA gives no right to object to the decision to disclose itself.

What does the ATO report, and who can see it?

The ATO says it reports the business's ABN, legal name and business name, the type of entity and the amount of the overdue tax debt. It must publish its list of registered bureaus (s 355-72(8)), and at 29 October 2026 the list named seven, including CreditorWatch, Equifax and Experian.

The bureaus use the information in credit worthiness reports about the business (s 355-72(1)(d)), so a lender or supplier running a credit check through one of them can see it. The ATO itself has said a disclosed debt can affect a business's ability to get finance and that the business may lose suppliers (media release, last updated 7 October 2023). Once the information is in a credit report, tax secrecy rules generally don't stop the people who receive it from passing it on (s 355-215).

Does an ATO debt or payment plan affect your credit rating?

Only a business that meets the criteria above can be reported under this regime.

• On a payment plan: debt under a plan you're keeping to doesn't count. If you default, it does.
• No ABN: an individual who isn't registered in the Australian Business Register isn't in the declared class.
• Legal action: if the ATO goes to court, a judgment, a winding up application or order, or a bankruptcy is generally a matter of public record. Winding up applications and orders must be published (Corporations Act 2001, s 465A) and bankruptcies are recorded on the National Personal Insolvency Index, so lenders and suppliers can find them whether or not the debt was ever reported.

Lenders also often ask about tax debts directly, so a debt can affect a finance application even if it's never reported.

What if your debt has already been reported?

The ATO can update or correct the bureaus' information once a business is no longer in the declared class (s 355-72(4)). It says the information will be removed when the business no longer meets the criteria, which happens when it pays the debt in full or effectively engages with the ATO to manage it. Once you've done that, ask the ATO to confirm it has updated the bureaus, and check the business's credit report.

What should a small business owner do now?

1. Get the full picture. Download the ATO statement for each account and work out how much has been overdue for more than 90 days.
2. Check the debt is right. Look for estimates, default assessments, penalties and misallocated payments. A wrong debt calls for a correction or objection, not just a payment plan. An objection doesn't usually stop the debt being payable in the meantime, so agree with the ATO how the disputed amount will be handled.
3. Keep lodging on time, even if you can't pay. For company directors, if PAYG withholding or GST isn't reported within 3 months after its due date, a director penalty for that amount can no longer be remitted by putting the company into administration, small business restructuring or liquidation. For super guarantee charge, the cut-off is the due date itself (s 269-30(2)).
4. Contact the ATO before the due date. Propose a plan built on a realistic cash-flow forecast, keep new lodgements and payments up to date, and ask about interest on the payment plan.
5. Act on every deadline. A notice of intent to disclose gives 28 days after it is given, a director penalty notice 21 days from when the ATO posts or leaves it (s 269-25), and a statutory demand generally gives a company 21 days after it is served to pay or apply to set it aside (Corporations Act, ss 459E and 459G). Each period can start before you open the envelope, and an application to set aside a statutory demand can only be made within those 21 days (Corporations Act s 459G(2)).
6. If the business can't pay its debts, get advice early. For a viable company, small business restructuring under Part 5.3B of the Corporations Act may be an option if it meets the eligibility criteria (s 453C). See ATO statutory demands, winding up and bankruptcy.

How we help

• Check the debt and the dates. We confirm what is overdue, for how long, and whether the business meets the reporting criteria.
• Deal with the ATO. Within the 28 days, we prepare a payment proposal or objection for the ATO, or a complaint to the Inspector-General. We negotiate the timing of recovery action and seek remission of GIC and penalties, keeping directors' personal exposure in view.
• Work with your accountant. If your accountant is already involved, we work alongside them.

Next step

Send us every page of the notice of intent to disclose if you have one, and tell us the date on it. Add the business's ATO statements of account and a short cash-flow forecast for the next three months. In a short first call we'll work out whether the business meets the reporting criteria, how long you have and what to put to the ATO first.