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The payment of tax debt during bankruptcy proceedings

Published on 01 May 14 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

This article explores the issues surrounding corporate insolvency, the non-remittance of PAYG withholding tax, and the non-remittance of superannuation guarantee charges and civil liability of directors for it. The director penalty regime may ultimately result in bankruptcy proceedings against directors and this article considers the interaction of bankruptcy law with the director penalty regime. Directors of a company will most likely face civil litigation for an unpaid tax debt should the alternative ATO enforcement procedures not succeed.

The Commissioner, in order to enforce the judgment debt, will ultimately commence bankruptcy proceedings in the Federal Circuit Court of Australia by way of creditor’s petition and after an act of bankruptcy has occurred. This article emphasises, with the recent authority of Soong’s case, that it is vitally important for all directors to be vigilant to ensure that the company is meeting its tax obligations, and to take action if it appears that the company is having difficulty paying these amounts.

Author profile:

William Calokerinos CTA
William is a Barrister-at-Law, Wentworth Chambers. Current at 01 May 2014
 
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