“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.
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.
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.
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.
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.
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 imposed by the Corporations Act on directors and officers of companies include the requirement:
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.
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
“I’ve now referred two liquidations to Dissolve and in both cases my clients were amazed at the ease of the appointment process and how quickly the liquidation was finished.”…
Partner of a Sydney Accounting Firm
“Cliff and his staff provided a fast, efficient and friendly service. The process was simplified and all steps were communicated well. The price was exactly as advertised with.”…
Director of a Property Development Company
“…after I gave Dissolve the go-ahead I received the No Asset Liquidation Package within two hours and I had the company in liquidation the next morning.”…
Director of a Fashion Retailer