Not Meeting Your ATO Arrangements Makes it Difficult to Borrow the Funds You Need

Have you entered into an arrangement with the Australian Taxation Office (ATO)? Were you unable to pay your tax debt on time and have opted for a pay-by-instalment plan? Have you missed a payment?

Unfortunately, ATO arrangements, if not met, can inhibit your ability to borrow funds – now, and in the future. In this article, we’ll examine this issue in a little more detail, and share a case study with you that demonstrates just how critical it is to pay the ATO on time.

Let’s get Started

Your credit history

If you have ever applied for credit or a loan, you most likely have a credit report. Even if you didn’t go through with the loan, chances are, a report was created in your name.

Your credit report tracks your borrowing history. Lenders and other credit providers use this information to determine whether or not you can afford a loan and are likely to pay it back as per the schedule.

To ensure your credit history remains favourable, it’s essential to pay back the following before the due date:

  • Credit cards – it’s also wise to avoid maxing out your credit card limit as well as making sure that your repayments are on time as they are now looking at this
  • Loan repayments
  • Scheduled ATO payments

It is especially critical to avoid missing payments to the ATO when you have entered into an agreement as a business or sole trader.

Case study: client fails to pay scheduled ATO payments

Here’s a case study that illustrates just how vital it is to cover all scheduled payments to the ATO after an agreement has been entered into.

A client of ours had missed two payments to the ATO. The most recent of which bounced. We engaged our client and advised that two missed repayments with the ATO in the last 12 months would almost certainly prohibit them from borrowing funds.

Long story short, the client was unable to secure the finance they needed.

The implications of missing scheduled payments to the ATO

If you are in an agreement with the ATO, you must make your payments on time. If you don’t, there is no hiding it.

Implications of missing scheduled payments to the ATO include:

Changes must be lodged with ASIC within 28 days of the annual statement issue date. If you fail to do so, late fees will apply as follows:

  •  It becomes extremely difficult to secure prime funding. That is funding from major banks.
  •  It becomes challenging to secure low-doc asset financing from major lenders.
  •  It affects your personal borrowing too, including your home mortgages and investment borrowing.

Need professional guidance?

Have you entered into an agreement with the ATO? Would you like to exit the agreement or secure conditions that better meet your needs? Get in contact with the team at Pherrus. We can help you leave an agreement or negotiate an agreement on your behalf.

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