Winding Up Applications And The ATO

Winding Up Applications And The ATO

Winding up applications initiated by the Australian Taxation Office (ATO):
The ATO’s activity on delinquent taxpayers is not a temporary measure. Winding up applications have continued in high numbers from May through to September 2015. It has been suggested that statutory demands, the precursor to a winding up application, are also being issued in historically high numbers.

As this increase in winding up applications is driven by a policy change – the reduction of the ATO’s threshold for pursuing debts from $300,000 to $30,000 – there is no reason to anticipate a change in the near future. So if the ATO has issued you with a statutory demand, or you are worried they may come knocking on your door soon, what are your options?

It is important to note that liquidation is not inevitable once a statutory demand has been received or a winding up application issued. Directors will have numerous opportunities to save their company – in fact many winding up applications that lead to liquidation do so simply because the application was uncontested.

To avoid liquidation, promptly responding to statutory demands before they escalate to a winding up application is the best course of action. If this is not possible, Directors still have various options to mitigate the risk of liquidation, but they must be implemented prior to the winding up hearing.

Some of these options are:

  • Appointing a Voluntary Administrator, with a view to proposing a Deed of Company Arrangement;
  • Negotiating a settlement of the debt;
  • Entering into an instalment arrangement so that the debt can be repaid in instalments over time;
  • Getting all statutory lodgements up-to-date to ensure the amount being claimed is correct; or
  • Challenging the winding-up application.


If you are concerned about the ATO pursuing any outstanding taxes owed by you, you should review the above list and consider what may suit your situation best.

Many of these options will require professional advice to implement, generally that of your existing adviser or lawyer. However, if it is decided that a Voluntary Administration is your best option, you will need to discuss this with an insolvency practitioner.

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Thompsons Australia Newsletters and articles are distributed by professional tax practitioners to provide information of general interest to our clients. The content of this newsletter does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.

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