The Australian Tax Office recently released its 2004-2005 annual report. In the report, Commissioner of Taxation Michael Carmody wrote that there has been a special focus on debt collection, resulting in a 27% increase in debt revenue taken in this past year. Commissioner Carmody went on to say that that he "remains concerned at the debt position" and:

"Notwithstanding a substantial increase in collections from our debt activities, collectable debt as a percentage of total collections continues to rise. During the year we adopted new strategies and increased the resources devoted to debt collection. It is clear that more will need to be done in the coming year."

Members of the business community believe that this statement should serve as a warning to businesses who are delaying payment of taxes in order to use the money for working capital needs. In the past, the Tax Office has been accommodating about delinquent payments. Interest on unpaid taxes has averaged a relatively low 12.5%, which may have incentivized some companies to delay tax payments in favour of other uses for the money. However, this strategy should be seen as extremely short-sighted and quite risky. According to Dun & Bradstreet CEO, Christine Christian, if the Tax Office takes legal action against a company for failure to pay taxes, that company is prohibited from accessing mainstream credit for at least five years.

One of the best available strategies to stay off the Tax Office hit list is to clear up delinquent tax payments quickly by taking a business loan. At the present time, banks are making it easier to access a business loan. Lending institutions have introduced Non-Conforming loans, have accelerated the approval process and offer competitive rates. As a result, loans to businesses in Australia jumped 13.1 percent in the year ended Sept. 30, 2005 their fastest pace of growth in nine years.

Prudent business practice demands that Australian businesses meet their national tax burden in a timely way, even if it means taking on debt. Those companies who fail to meet their tax obligation in the appropriate timeframe, risk jeopardizing their company's longer term ability to access credit when needed.