Bankruptcy, liquidation and SBR questions: your questions answered
In plain English
What bankruptcy, liquidation and small business restructuring actually do to a tax debt, what they cost, how long they take, and what the ATO tends to accept.
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These are short, direct answers. The complete picture is in Liquidation & ATO debt.
Does bankruptcy clear tax debt in Australia?
Yes, in most cases. Income tax, GST, PAYG and the interest and penalties attached to them are provable debts, and they...
Answer →Does bankruptcy clear GST or BAS debt?
Yes, if the GST or BAS debt is personally yours. A sole trader's or partner's GST, PAYG withholding and PAYG instalment...
Answer →Which tax debts survive bankruptcy?
Very few. Income tax, GST, PAYG, GIC and ATO administrative penalties owed at the bankruptcy date are all released on...
Answer →What happens to my tax refund in bankruptcy?
It depends on which year the refund belongs to. A refund for income earned before the bankruptcy date is an asset your...
Answer →Is it better to go bankrupt or negotiate with the ATO?
For most people, negotiating comes first. A payment plan, interest remission or hardship release costs nothing, stays...
Answer →Does a personal insolvency agreement cover tax debt?
Yes. Tax debts are unsecured debts, so a personal insolvency agreement (PIA, under Part X of the Bankruptcy Act) can...
Answer →Does a Part 9 debt agreement cover tax debt?
Yes. A Part IX debt agreement can include income tax, GST and other ATO debts you owe personally, and if a majority of...
Answer →Can I close a company that owes the ATO?
Not by simply deregistering it. ASIC voluntary deregistration requires the company to have no outstanding liabilities,...
Answer →Weighing bankruptcy, liquidation or restructuring?
The wrong choice here is expensive and hard to undo. Get it checked by someone who does it every week.
What happens to tax debt when a company is liquidated?
The company's tax debt ends with the company. In liquidation the ATO is an unsecured creditor: it lodges a claim,...
Answer →Can I be a director again after liquidation?
Usually, yes. One liquidation does not disqualify you from being a company director.
Answer →How much does liquidation cost?
A simple creditors' voluntary liquidation of a small company with few assets is commonly quoted at around $10,000 to...
Answer →How much does small business restructuring cost?
ASIC's Report 810 found a median restructuring practitioner fee of $21,998 for the whole process, with $20,001 to...
Answer →How long does small business restructuring take?
About 7 weeks from appointing the practitioner to knowing whether creditors accept the plan.
Answer →What cents in the dollar does the ATO accept in an SBR?
There is no published minimum, but completed restructuring plans have paid a median of 20 cents in the dollar, and 59%...
Answer →Is my company insolvent? The three tests
Your company is insolvent if it cannot pay its debts as and when they fall due.
Answer →What is illegal phoenix activity, and where is the line?
Illegal phoenix activity is when a new company takes over an old company's business for little or nothing, and the old...
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