What happens if my Company has an outstanding tax debt?

adminCompany Liquidation, Taxation

Company Liquidation is an option but before pursuing that, the process of debt collection used by the Australian Taxation Office will usually involve;

  1. Issuing reminder letters that state outstanding lodgements or debts exist.
  2. Issuing more serious reminder letters indicating possible penalties and interest charges that may apply to outstanding returns or non-payment of the debt.
  3. Direct contact by email or telephone by an ATO officer or its engaged debt collectors seeking the reasons for, or rectification of the non-lodgement/non-payment.
  4. Payment arrangements may be considered by the ATO but this often requires a Company to provide reports on the financial circumstances and position to ensure any instalment agreement can be fulfilled.
  5. Garnishee Notices can be issued if the ATO is not satisfied by a Company’s explanation or approach to dealing with the issues, or if an repayment agreement fails. The Garnishee can be served upon a Company’s bank or other persons, including debtors, who hold money on your behalf that will compel them to pay your money to the ATO without your input and outside of your control.
  6. Directors can be held personally liable for a Company’s debt – specifically the outstanding PAYG and Super Guarantee Charge debts. The ATO does this by serving a Director Penalty Notice that will impact a director’s personal assets and may result in personal bankruptcy.
  7. A Statutory Demand may be issued in relation to the outstanding debt. If the debt remains unpaid more than 21 days after the issue of the Demand the Company is deemed to be insolvent and the ATO can then apply to wind up your Company.
  8. Winding Up Application. Once a winding up application is before the Court, a Director can no longer choose a liquidator. The Court will appoint a Liquidator from the ATO’s panel of Liquidators.

While a Company may be wound up, the main issue of concern for any director must be in relation to Point 6 – Personal Liability for Directors for certain Company’s Tax Debts. In this regard, we strongly recommend you read all about Director Penalty Notices on our website.

ALTERNATIVELY call The Insolvency Experts anytime on 1300 767 525 to discuss your specific circumstances.

In calling us, you will be speaking directly with an experienced, licensed and Registered Insolvency Expert who will explain all your options and offer solutions about what can be done in the circumstances.

The Insolvency Experts – Everything you need to know – No Cost or Obligation – 24 Hours.