ATO’s new credit rating crackdown pushes small businesses to pay tax debts

The Australian Taxation Office (ATO) is cracking the whip on small businesses who haven’t been keeping up with their tax payments by posing a threat to their credit ratings.
Thanks to laws passed last year, the ATO can now reveal small businesses’ tax debt to credit reporting agencies should the business meet the following criteria:
- The business has more than $100,000 in tax debt
- The business has an ABN
- The business is more than 90 days in arrears
- The business hasn’t set up a payment arrangement or negotiated one
And according to national business funder, Scottish Pacific, many business owners don’t know about it.
“Traditionally, many SMEs have used the ATO almost like a ‘line of credit’ by not paying their commitments on time,” said Wayne Smith, Scottish Pacific’s Senior Executive.
“It’s not the best option but if a business is tight for cash they often make a decision to pay other creditors and delay paying the ATO, thinking they will eventually put a payment arrangement in place."
Smith went on to say the new laws will give Aussie businesses a bigger push to avoid accruing tax debt with the ATO.
“This action will now likely have an adverse impact on credit ratings and credit insurance limits, making it harder to maintain or extend credit terms with suppliers.”
RELATED ARTICLE: How online marketplaces can help your business grow
But will coughing up funds for paying tax on time disrupt businesses’ cash flow?
Over a quarter of Aussie businesses think yes.
In Scottish Pacific’s most recent SME Growth Index, it found that 27.8% of respondents said meeting tax payments promptly would create cash flow issues in their business.
But Mr Smith warns that the new laws are a clear message from the ATO that businesses must stop viewing it as a line of credit.
“With forecasts for a poor economic outlook in 2020, if ever there was a time to make sure you have a sustainable funding structure in place for your business, that time is now.” he said.
What options are there to fund my business and improve cash flow?
There are plenty of ways to help your business financially so you can see it prosper and grow. Here’s a handful of financial products you could consider:
- Business loan: As the most popular option for Aussie business owners, business loans offer flexibility with a range of borrowing limits and loan terms. It’s worth comparing various lenders to find a competitive rate, as well as minimal fees and any bonus features on offer.
- Merchant cash advance: This can be an alternative to a loan, as a lump sum cash advance payment you’ll receive from a lender upfront. Over time you pay down your loan amount and the lender receives an agreed upon percentage of the business transactions. Keep in mind though, there is generally a fee associated with this option.
- Invoice finance: When it comes to maintaining cash flow, this could be an option to help it. Invoice finance allows businesses to receive up to 95% of an invoice amount from a lender straight off the bat, then the remaining amount once the invoice comes through (minus a fee or charge).
- Lines of credit: If you need a funding option to have at your disposal on an ongoing basis, this could be a good alternative to a standard business loan. With this option you can dip into the funds when you need it, and you’ll only pay interest on the amount you actually drew on.
RELATED ARTICLE: 5 types of business finance to grow your business in 2020
Ready to start reviewing your business’ funding? Check out our business loans comparison table or head over to our guides page for more handy tips on all things small business finance.
Business Loans 2020 - rates updated daily
Line of Credit
Unsecured business funding up to $500K. Start the online application process in just 5 minutes, and get access to funds within 24 hours once approved. Great for ABN registered businesses with an annual turnover of $200K+.
Interest Rate
Upfront Fee
Funding speed
On Application2% to 3%Instantly, once approvedLine of Credit
Unsecured business funding up to $500K. Start the online application process in just 5 minutes, and get access to funds within 24 hours once approved. Great for ABN registered businesses with an annual turnover of $200K+.
- Interest Rate
- On Application
- Upfront Fee
- 2% to 3%
- Ongoing Fees
- $0.00
- Late payment fee
- -
- Transaction fee
- -
- Early repayment penalty
- 0
- Other fees
- Various late payment fees may apply.
- Loan type
- Line of Credit
- Security type
- Unsecured
- Minimum loan amount
- $10,000
- Maximum loan amount
- $500,000
- Minimum loan term
- 6 months
- Maximum loan term
- 5 years
- Repayment frequency
- Weekly, Fortnightly, Monthly
- Repayment types
- Principal & Interest
- Minimum trading period
- 18 months
- Minimum annual turnover
- $200,000
- Application speed
- 10 minutes
- Approval speed
- 24-48 hours
- Funding speed
- Instantly, once approved
- Extra repayments allowed
- Yes
- Redraw allowed
- Yes
- Other benefits
- -
- Other restrictions
- -
Short Term Business Loan
Unsecured business loans from $10,000 - $250,000, over 6 to 24 months. Online application takes only 10 minutes and you'll know if you're approved within hours. Apply now.
Interest Rate
Upfront Fee
Funding speed
On Application3.00%from 24 HoursShort Term Business Loan
Unsecured business loans from $10,000 - $250,000, over 6 to 24 months. Online application takes only 10 minutes and you'll know if you're approved within hours. Apply now.
- Interest Rate
- On Application
- Upfront Fee
- 3.00%
- Ongoing Fees
- $0.00
- Late payment fee
- $0.00
- Transaction fee
- $0.00
- Early repayment penalty
- $0.00
- Other fees
- -
- Loan type
- Loan
- Security type
- Unsecured
- Minimum loan amount
- $10,000
- Maximum loan amount
- $250,000
- Minimum loan term
- 6 months
- Maximum loan term
- 2 years
- Repayment frequency
- Daily, Weekly
- Repayment types
- Principal & Interest
- Minimum trading period
- 1 year
- Minimum annual turnover
- $100,000
- Application speed
- 10 Minutes
- Approval speed
- from 24 Hours
- Funding speed
- from 24 Hours
- Extra repayments allowed
- No
- Redraw allowed
- Eligible to apply for renewal after 50% paid down
- Other benefits
- -
- Other restrictions
- Minimum $100k turnover and 1 Year in Business.
Invoice Finance
Get your customer invoices paid early, without waiting up to 90 days for payment. Apply online in 10 minutes and select your local or overseas invoices to fund. Flexible funding with no lock-in contract.
Interest Rate
Upfront Fee
Funding speed
On Application$0.00Same DayInvoice Finance
Get your customer invoices paid early, without waiting up to 90 days for payment. Apply online in 10 minutes and select your local or overseas invoices to fund. Flexible funding with no lock-in contract.
- Interest Rate
- On Application
- Upfront Fee
- $0.00
- Ongoing Fees
- $0.00
- Late payment fee
- $0.00
- Transaction fee
- On Application
- Early repayment penalty
- $0.00
- Other fees
- -
- Loan type
- Line of Credit
- Security type
- Secured
- Minimum loan amount
- $10,000
- Maximum loan amount
- $100,000,000
- Minimum loan term
- 0 years
- Maximum loan term
- 4 months
- Repayment frequency
- -
- Repayment types
- -
- Minimum trading period
- 0 years
- Minimum annual turnover
- $0
- Application speed
- 10 Minutes
- Approval speed
- 24 hours
- Funding speed
- Same Day
- Extra repayments allowed
- yes
- Redraw allowed
- yes
- Other benefits
- No lock in contract, flexible funding drawdowns, international invoices, trade finance
- Other restrictions
- -
- Hot DealNo repayments on Lumi Business Loans for the first 6 weeks (T&Cs apply).
Unsecured Business Loan
A straightforward business loan with no hidden Lumi fees or charges. Speedy application and approval process with fast access to funds according to Lumi.
Interest Rate
Upfront Fee
Funding speed
from 9%$0.00Within same dayUnsecured Business Loan
A straightforward business loan with no hidden Lumi fees or charges. Speedy application and approval process with fast access to funds according to Lumi.
- Interest Rate
- from 9%
- Upfront Fee
- $0.00
- Ongoing Fees
- $0.00
- Late payment fee
- -
- Transaction fee
- $0.00
- Early repayment penalty
- $0.00
- Other fees
- $0.00
- Loan type
- Loan
- Security type
- Unsecured
- Minimum loan amount
- $5,000
- Maximum loan amount
- $300,000
- Minimum loan term
- 3 months
- Maximum loan term
- 3 years
- Repayment frequency
- Weekly
- Repayment types
- Principal & Interest
- Minimum trading period
- 6 months
- Minimum annual turnover
- $50,000
- Application speed
- 10 minutes
- Approval speed
- 2 hours
- Funding speed
- Within same day
- Extra repayments allowed
- yes
- Redraw allowed
- yes
- Other benefits
- -
- Other restrictions
- Loans above $300,000 must be secured by property.
Unsecured Business Loan
Business Loans from $5,000 to $600,000 with high approval rates. Access to funds in as little as 3 hours. Cash flow friendly repayments and open minded offers.
Interest Rate
Upfront Fee
Funding speed
On Application3%, starting at $399from 3 hoursUnsecured Business Loan
Business Loans from $5,000 to $600,000 with high approval rates. Access to funds in as little as 3 hours. Cash flow friendly repayments and open minded offers.
- Interest Rate
- On Application
- Upfront Fee
- 3%, starting at $399
- Ongoing Fees
- no
- Late payment fee
- $50.00
- Transaction fee
- -
- Early repayment penalty
- no
- Other fees
- -
- Loan type
- Loan
- Security type
- Unsecured
- Minimum loan amount
- $5,000
- Maximum loan amount
- $600,000
- Minimum loan term
- 3 months
- Maximum loan term
- 1 year
- Repayment frequency
- Weekly, flexible
- Repayment types
- Principal & Interest
- Minimum trading period
- 6 months
- Minimum annual turnover
- $120,000
- Application speed
- 10 Minutes
- Approval speed
- within 1 hour
- Funding speed
- from 3 hours
- Extra repayments allowed
- yes
- Redraw allowed
- no
- Other benefits
- Daily repayments available.
- Other restrictions
- -
Invoice Finance
Waddle Invoice Finance connects with your accounting software to make managing cash flow easy. Get funds from your unpaid invoices with Waddle, a cash flow platform combining innovative tech with competitive rates and flexible terms.
Interest Rate
Upfront Fee
Funding speed
Starting from 6%$0.00Same dayInvoice Finance
Waddle Invoice Finance connects with your accounting software to make managing cash flow easy. Get funds from your unpaid invoices with Waddle, a cash flow platform combining innovative tech with competitive rates and flexible terms.
- Interest Rate
- Starting from 6%
- Upfront Fee
- $0.00
- Ongoing Fees
- $0.00
- Late payment fee
- $0.00
- Transaction fee
- 0.50% - 1.50% drawdown fee on each transaction
- Early repayment penalty
- $0.00
- Other fees
- -
- Loan type
- Line of Credit
- Security type
- Secured
- Minimum loan amount
- $10,000
- Maximum loan amount
- $4,000,000
- Minimum loan term
- -
- Maximum loan term
- -
- Repayment frequency
- flexible
- Repayment types
- Principal & Interest
- Minimum trading period
- 6 months
- Minimum annual turnover
- $10,000
- Application speed
- Varies
- Approval speed
- 48 Hours
- Funding speed
- Same day
- Extra repayments allowed
- n/a
- Redraw allowed
- n/a
- Other benefits
- Waddle connects with leading accounting platforms including Xero, MYOB and Quickbooks.
- Other restrictions
- Requires at least $10,000 in invoices to other Australian businesses.
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.