The ATO’s Tax Debt Policy

The following is an excerpt from the ATO Receivables Policy. The full policy can be found here<link>.

- Officers attempting to recover debts from companies may take all necessary steps to expand the Commissioner’s options to facilitate recovery from directors;

- Directors of companies may be personally liable to pay a penalty equivalent to some amounts which have not been remitted by the company (per sections 222AOC and 222AOD of the ITAA 1936). A notice in terms of section 222AOE or section 222APE of Division 9 of Part VI of the Act (known as a Director Penalty Notice) cannot be served once a corporation is placed in liquidation (see chapter entitled ‘Payment agreements’). Accordingly, before taking action to wind up a company that has not remitted these specific amounts, a notice in terms of section 222AOE or section 222APE ITAA 1936 should be issued;

- The Corporations Act also provides for directors to assume personal liability for debts incurred by a company while it was trading insolvently. It may, therefore, be appropriate to wind up a company with a view to having the Liquidator pursue the directors for payment of the outstanding debt;

- Cases where a director of a company currently indebted to the Commissioner has a past association with another company that went into liquidation leaving significant amounts owing, should be brought to the attention of the relevant technical area to take appropriate action.