Creditors are poised to receive greater protection from businesses owing debts of more than $150,000 as the Government has now set a threshold for reportable tax debt, Revenue Minister Judith Collins says.
Changes to the law earlier this year allowed Inland Revenue to disclose information about companies with significant tax debt to certain approved credit reporting agencies. A recent Order in Council sets a threshold of $150,000. A company’s tax debt over this amount may be disclosed to certain credit reporting agencies.
Ms Collins says this information can be critical for smaller creditors who would otherwise be unaware they were dealing with a business that has a significant tax debt.
“Usually when a company’s tax debt reaches this level, it’s likely that other options to resolve the debt have been unsuccessful and Inland Revenue may be considering insolvency and enforcement proceedings. At this point the risk to other creditors is greatest.
“This approach we’re taking to debt is similar to the commercial approach. It means that smaller creditors dealing with a business carrying significant tax debt will be able to make more informed decisions about credit risks,” Ms Collins says.
The $150,000 tax debt threshold was decided after extensive consultation and will come into force on 29 June 2017. It is currently limited to companies.