In November last year, we wrote about the ATO taking steps to compel businesses to comply with tax obligations. The ATO was issuing letters to tax debtors warning them of the risk of being reported to creditor reporting agencies. This power was provided by the Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Act 2019.

The ATO has recently issued approximately 50,000 letters to directors of companies with unpaid tax debts, warning them of potentially being made personally liable for the company’s tax debts. These provisions, known as the director penalty regime are not new. Director penalty notices (DPNs) are issued by the ATO to make directors personally liable for their company’s unpaid tax debts. The ATO however had virtually stopped issuing DPNs during the COVID-19 pandemic due to the effects of the pandemic had had on businesses in Australia.

Given the amount of warning letters issued, the ATO appears to be now taking steps to issue DPNs.

What should you do if you received the letters?

If you received any of the letters, the first thing you should do is to speak to a professional. You can either speak to your accountant or an insolvency professional. It is crucial that you take steps early on as there are time frames to comply with to prevent the ATO from taking further action.

Your accountant or an insolvency professional will be able to assist you in engaging with the ATO. If done urgently this can prevent the ATO from taking further action. A professional can then provide you with advice on how to deal with your company’s tax debts, including negotiating with the ATO for a payment arrangement.

We can help

The team at TAX DEBT SOLVED is led by practitioners with more than 20 years of experience in dealing tax debts. If you have concerns about your company not being able to keep up with its tax obligation, contact us for a free no-obligation consultation.