To make someone bankrupt, the ATO must generally obtain a judgment against them for a tax debt over $5,000. Once the ATO has obtained a Judgment it will issue the person with a Bankruptcy Notice, giving 21 days from the date the Bankruptcy Notice is served to pay the tax debt owed. If the amount claimed in the Bankruptcy Notice is not paid, the ATO will apply to Court in order to bankrupt the person.
A person who cannot pay their debts, including their tax debts, may also voluntarily file for bankruptcy by lodging a Debtor’s Petition with the Australian Financial Security Authority (AFSA), a Federal Government agency. If a person voluntarily files for bankruptcy they may nominate to appoint a bankruptcy Trustee or they may appoint the Official Trustee from AFSA.