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Worried about a Company Tax Debt?

Welcome to Dissolve, Specialists in Low Cost Company Liquidations

“I’ve already shut the business down and now I’m getting hassled by creditors and the tax man. How do I get away from all this?”

“What if there was a way we could quickly close the company and get rid of the worry and costs? We don’t want to risk personal liability and we need to stop the creditor pressure.”

There are several actions the ATO can take against a company struggling to pay their tax debt.

  • Garnishee Notice
  • Director Penalty Notice
  • Departure Prohibition Order

If you have received one of the above notices from the ATO, don’t panic. In our experience assisting companies with tax debts we have found the ATO to be quite reasonable in agreeing to a repayment plan. It is important that the plan be achievable and backed up by logical projections. The ATO is usually reasonable in agreeing to the first repayment plan but if that defaults, quite understandably, they will not be as accommodating the second time around.

Has your Company Received a Garnishee Notice?

By visiting our site you are showing that you’re worried about your struggling company. It may be that you have had enough of all of those sleepless nights and cashflow nightmares. Perhaps you’ve already ceased to trade and are wondering how to finalise things.

A Garnishee Notice entitles the Australian Tax Office to collect an outstanding tax debt by directly removing monies from an insolvent company’s bank account or directly collect monies from a company’s creditors.

The effect of a Tax Garnishee Notice

A tax garnishee notice has the effect of making the Tax Office a secured creditor over the debts or monies due to the insolvent company. The garnishee notice creates a statutory charge which ranks as a fixed charge and in priority to any previously created floating charges which have not crystallised prior to service of the garnishee notice.

In a nutshell, the Tax Office achieves priority over certain existing secured creditors and priority over unsecured creditors for payment of what is, in effect, an unsecured debt.

What to do when you receive Notice of a Garnishee

It is important to act immediately to establish both the validity of the Notice and compliance with the policy considerations and limitations outlined in the ATO’s Receivables Policy. The Commissioner’s power to issue a Notice under sections 260-265 is an administrative discretion and there may be circumstances which may cause the Commissioner to review his decision.

Proactive action is necessary as, in practise, the service of a garnishee notice may have an extremely detrimental impact on the cash flow of a business.

If Liquidation is the right solution for your company then you’ll be pleased to know it is a simple process. We will usually recommend a Creditors Voluntary Liquidation, or “CVL”, which is quick, simple and inexpensive.

If you’d like to discuss your options why not CONTACT US NOW for CONFIDENTIAL FREE ADVICE.

Worried about Personal Liability for your Company’s Tax Debt?

Are you worried that you might do something that makes you personally liable for your company’s debts? There are a number of ways this can happen so we’ve brought the information together into this page. Most importantly, if your company is insolvent, or there is a real risk of insolvency, your legal duties expand to include creditors.

General requirements

General requirements imposed by the Corporations Act on directors and officers of companies include the requirement:

  • to exercise your powers and duties with the care and diligence that a reasonable person would have, which includes taking steps to ensure you are properly informed about the financial position of the company and ensuring the company doesn’t trade if it is insolvent;
  • to exercise your powers and duties in good faith in the best interests of the company and for a proper purpose;
  • not to improperly use your position to gain an advantage for yourself or someone else, or to cause detriment to the company; and
  • not to improperly use information obtained through your position to gain an advantage for yourself or someone else, or to cause detriment to the company.

Duty to not trade while insolvent

As well as general directors’ duties, you also have a duty to prevent your company trading while insolvent. A company is insolvent if it is unable to pay all its debts where they are due. This means that before you incur a new debt you must consider whether you have reasonable grounds to suspect that the company is insolvent or will become insolvent as a result of incurring the debt. An understanding of the financial position of your company only when you sign off on the yearly financial statements is insufficient. You need to be constantly aware of your company’s financial position. If you are not sure if your company is solvent or not go to our page Is my company insolvent? or Call us now for Confidential Free Advice.

Duty to keep books and records

Your company must keep adequate financial records to correctly record and explain transactions and the company’s financial position and performance. A failure of a director to take all reasonable steps to ensure a company fulfils this requirement contravenes the Corporations Act. For the purposes of an insolvent trading action against a director, a company will be presumed to have been insolvent throughout a period where it can be shown to have failed to keep adequate financial records.

If you are not used to preparing projections or if you are not sure if your company is viable CONTACT US NOW for CONFIDENTIAL FREE ADVICE

Why Choose Dissolve?

  • Low Cost – By focusing on a single, highly specialised service area, we are able to bring to bear our experience and professional judgment to develop highly streamlined systems and a timely service. Also, unlike other Registered Liquidators, we do not seek appointment to large or complicated assignments. Hence we are geared for smaller companies and so we don’t have any expensive overheads.
  • No Conflict – Dissolve is free of the conflicts inherent in using a company’s auditor to perform the liquidation of a group company. In many situations an audit firm should not be performing liquidation services for an audit client due to a conflict of interest.
  • Fixed Fee – We sometimes speak to directors that are concerned about a liquidator’s fees using up all of the assets of the company so that priority creditors and other creditors receive no distribution form the liquidator. At Dissolve, we are happy to provide a fixed quote to cover the standard aspects of a company liquidation as long as we can establish:
    • What assets the company has and where they are located;
    • The number of creditors;
    • Any issues likely to complicate the liquidation.
  • Same-day Appointments – If a Director receives a Director Penalty Notice it requires the directors to take action within 14 days of issue or the director will be personally liable for the debt. If you are close to the 14 days expiring, you’ll be pleased to know that we are able to organise the appointment of a liquidator within a couple of business hours.
  • Local Knowledge – With over 50 years combined experience in New South Wales, Dissolve has local knowledge, contacts and knowhow. This allows us to perform your liquidation quickly, efficiently and for a lower cost.

There's no time to lose! Contact us now for confidential, free advice.

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Is My Company Insolvent?

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  • Insolvent Trading
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