We know, you stuck your head in the sand, had no idea where to start, it all became too much, you are scared to go to jail and thought it was being looked after.
Then comes the pressure from the Australian Taxation Office and the pressure builds up.
You ignore their case and then it gets worse.
You are not alone, and we certainly don’t blame you – life has so many pressures.
So, when the going with the Australian Taxation Office gets too hard, here are some of the things that could happen that we can help you with:
You received a Creditors Statutory Demand
If you owe the ATO money, they can issue a statutory demand. A statutory demand is a formal written request that a debt must be paid. An individual or business that receives a statutory demand has 21 days to settle the debt.
This is court action, but it is less dramatic. Basically, you receive a creditors statutory demand and it’s a challenge to go to court and prove it’s wrong or pay it. If you don’t do either of these things, then the “debt is proven in court” and your creditor (in this case the Australian Taxation Office) can go to the next step which may include a Windup Notice of you trade in a company, or Bankruptcy notice if you trade as a sole trader, or in a partnership.
Things we consider:
Like so many things, when the pressure is on, the more time we have the better. No matter what, these things are best dealt with, rather than have what will happen imposed on you. Having a plan, knowing what is next, certainly gives relief to most of our clients, who can begin to plan forward.
You receive a Garnishee Notice
A garnishee order is a common form of enforcing a judgment debt against a creditor to recover money. The Australian Taxation Office has a statutory authority to send these out when they think fit to claim from your bank account usually a portion of the debt.
They send the order to the bank via email, and you by snail mail, so usually you know about it when money is missing from your bank account.
This is when the tax office reaches into your bank account and takes money (if it’s there). There are a number of degrees and this can go from a once off try to freeze you bank account. It depends how they see the relationship with you – are they firing a shot across the bow or are they really angry?
The Garnishee notice is a way that they tell you they are really sick of you. They believe you have the money, so they go ahead and take it.
When you get a Garnishee notice we will:
Once the taxman is taking money from your account it means that you need to have a strategy for the business and we will be there, with all our experience to help you.
You received a Bankruptcy Notice
A bankruptcy notice is a demand for payment of money. A bankruptcy notice is usually issued because the Australian Taxation Office has obtained a court judgment or judgments, worth $5,000 or more against you and has finished with the phone calls and other demands.
Bankruptcy should never be seen as an end game or strategy, just a tactic to get on with your life.
Debt can be too much of a burden and it’s time to seek relief through bankruptcy.
You can trade as a sole trader when you are bankrupt as long as you follow a few important rules.
When we advise and assist a client who faces bankruptcy we consider:
We have many clients go through bankruptcy, and now run great businesses that have purchased property. It’s a journey and by following a plan we can make the process less disruptive.
You received a Windup Notice
Under the Corporations Act the Australian Taxation Office (or anyone you owe money to) can serve upon the company a notice under Section 459E requiring the company to pay, or make satisfactory arrangements for payment, of the debt within 21 days of service of the notice. The notice is a “test of solvency”. If you can’t arrange to pay the debt, then the company will be handed to a court appointed liquidator.
Time is important. When a business receives a Windup Notice some decisions need to be made. The first decision is to determine whether the business is worth saving, and what may be on the balance sheet, that after windup would cause the stakeholder, a large amount of grief.
If you contact Your Business Angels with a Windup Notice:
As this is court action, the business owner is also pursued by all the ambulance chasers as well and will get a myriad of confusing messages. At Your Business Angels, at this point, we have recovered a lot of businesses with sensible, practical and financially responsible plans.
If you get a notice, contact us and we will focus on it that day.
Court writ for non-lodgement of tax BAS and returns
In common law, a writ is a formal written order issued by a court. It’s your invitation to appear in court for non-lodgements of accounts and unfortunately this is a criminal offence.
If you get one of these, you are going to need a lawyer.
Their first job will be to get an adjournment so that the accounts can be brought up to date and lodged.
Every year we work with clients who have received a writ for non-lodgement. From our experience it’s a bit of bad luck, as we have many clients, some who haven’t completed accounts for years, and they don’t receive a summons for late lodgements. Others aren’t so lucky. They received a summons even when they aren’t too far behind in lodgements.
To have the best chance:
Demand Letters
A letter of demand is usually sent when you have tried unsuccessfully to get your invoice paid and it is the right time to take more serious action. Often this is the final reminder letter before legal action.
There is a big list of the type of letters that the ATO can send out to you and perhaps it is easy to call us and untangle your tax problems. Here is just some of the mail you can get from the taxman:
If you don’t understand the mail you get from the ATO, or are worried about how much you are getting, call us, so we can help you get a decent compliance plan in place, satisfy the ATO and get them off your back.
Directors Penalty Notice
A Directors Penalty Notice is a Notice that the Australian Tax Office can send a director that can make that director personally liable for two types of tax debts of a company – Pay As You Go and Superannuation Guarantee Charge liabilities.
Effectively, when you receive a director’s penalty notice you are now, as well as the company, responsible for the company debt in relation to what the penalty is about – be it PAYG, or Superannuation, or both.
And now it can get messy.
You have about 21 days to do something about it, and if the business is not in good shape and probably can’t pay its tax debt, you need to do something to protect yourself.
If you have a director’s penalty notice, we need to know as quickly as possible. Some of the things we would need to consider is:
If you get a director’s penalty notice, then time is very limited and the sooner we have a plan – the better.
SO, IF ANY OF THESE THINGS HAVE COME YOUR WAY, then give us a call at Your Business Angels as time is the one thing we will be very short of. Let’s get a strategy in place and work forward as quickly as possible.
