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Enforcement of tax liabilities and solvency


The Commissioner of Taxation has broad powers of recovery of taxation liabilities, quite apart from the assessment, review and appeal process. Enforcement action by the Commissioner often presents issues of solvency of the taxpayer. In cases where the taxpayer wishes to dispute the tax assessed, a basic concern is to ensure that the opportunity to do so is not lost because of enforcement action. A taxpayer has options available to maintain a challenge to an underlying tax assessment, but careful consideration should be given to the approach taken, particularly as timing constraints are involved. Four topics within the overall framework of recovery that commonly give rise to questions of solvency are windings-up, stays, deferrals of time for payment, and garnishee notices.

This article explains the legal framework for each topic and discusses some practical issues that need to be managed in order to maximise the taxpayer’s chances of being able to argue the substantive tax dispute.

Author profile

Nishad Kulkarni
Nishad is a barrister on Fifth Floor, Selborne Chambers in Sydney. His principal area of practice is tax, with much of his work involving tax disputes and providing tax advice. He also specialises in insolvency, corporations and commercial law. He has published articles in journals including the Australian Law Journal, The Tax Specialist and the International Insolvency Review. Nishad was previously a tipstaff to Justice Gzell in the Supreme Court of New South Wales. - Current at 01 January 2015
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