Can the ATO wind up my company?

How it happens

1. Warnings. Reminders, then firmer action such as a garnishee on the company bank account, credit reporting for debts of $100,000 or more, or a director penalty notice.
2. Statutory demand. A formal demand to pay the whole debt or reach an arrangement within 21 days of service. If nothing happens, the company is presumed insolvent.
3. Winding up application. The ATO files in court and the application is served on the registered office. Service is valid even if that address is an old accountant's office nobody checks.
4. Advertising and hearing. The application is advertised on ASIC's insolvency notices site at least seven days before the hearing, which is typically a few weeks to two months after filing. Banks and suppliers watch that site.
5. Order. If the court is satisfied, it appoints a liquidator. Directors' powers end that day and the accounts are frozen.

What a winding up order means for you as director

The company is finished, but your exposure is not. The liquidator investigates director loans, insolvent trading and payments to related parties, and can pursue you personally. Personal guarantees to landlords and suppliers crystallise. Any director penalty notice still inside its 21 days can be remitted by the liquidation if it is a non-lockdown notice; a lockdown notice, or one whose 21 days have passed, stays with you.

There is no automatic director ban after one liquidation, but ASIC can disqualify directors of two or more failed companies. And a company debt can still reach your home if it has become personal; can the ATO take my house explains how.

Four ways to stop it

• Pay in full before the hearing. Costs will be added, and another creditor may be substituted as applicant if they have also been waiting.
• Negotiate a withdrawal. This takes all lodgements up to date, a meaningful upfront payment and a plan the ATO believes. A phone call the day before the hearing is not usually enough.
• Small business restructuring. For companies with total liabilities under $1 million, lodgements current and super paid. Courts usually adjourn a winding up to let a restructuring run, though a very late appointment gets scrutiny.
• Voluntary administration for larger or more complex companies.

If the company is not viable, a director-initiated liquidation is usually cleaner than a court-imposed one, and it gives you a say in who is appointed.

What to do next

1. Check the registered office address on ASIC and confirm who actually opens mail there, then look for any statutory demand or court documents.
2. Get an honest read on whether the company is viable: can it pay ongoing tax and trade profitably if the old debt were dealt with?
3. Speak to a specialist within 48 hours of any statutory demand or application, because SBR, VA and negotiated withdrawals all need lead time.

More questions: 21 What the ATO can and can't do questions answered · Full guide: Can the ATO take my house?