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ATO Departure Prohibition Order

What does it mean? What should you do?

The ATO has the power to stop a debtor from leaving the country (regardless of whether they intend to return or not) until such time as a debt is paid in full or suitable arrangements for payment of the debt are made.

This order would apply to a director who has been made personally liable for their company’s tax debt by way of a Directors Penalty Notice.

In deciding whether to issue a DPO, the ATO will take into account all relevant facts and circumstances. These may include (but are not limited to) whether:

  • there is a tax liability and whether it can be recovered;
  • known assets are sufficient to pay existing and future tax liabilities and whether those assets are in a readily-realisable form;
  • recovery proceedings have commenced;
  • the debtor has recently disposed of assets to associated persons or entities (the transaction may be overturned in bankruptcy);
  • there is any information to suggest concealment of assets (bank accounts in false names, use of an alias) or movement of funds (for example, AUSTRAC reports);
  • the debtor has entered into transactions that ‘charged’ assets in Australia and then moved the borrowed funds offshore;
  • the debtor has assets overseas adequate to maintain a comfortable lifestyle;
  • funds have been transferred overseas (and the purpose of the transfer);
  • the debtor has significant business interests in Australia;
  • the debtor is subject to investigation for criminal activities (and whether any charges have been laid);
  • there is a threat against the debtor’s life as a result of criminal or other activities;
  • there is ATO audit activity (or similar activity from other Government agencies);
  • the debtor holds (or the debtor has applied for) an Australian or foreign passport/visa/work permit;
  • the debtor has given an indication of likely overseas travel, and there is no apparent need for travel;
  • the debtor’s family situation (this information may not be relevant by itself, but when combined with a number of other factors, it may influence a decision to issue a DPO).

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If the above advice has not answered your questions you might want to review the following pages and downloadable Information Sheets:

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