Australian Taxation Office (“ATO”)
One of the major creditors in many businesses is the ATO. The amounts
owing by an entity to the ATO may include amounts for:
•
•
•
•
PAYG Withholding;
Superannuation Guarantee Charge;
GST; and
Income Tax.
Each of the above can have different due dates and different lodgement
obligations. Having the correct accounting set up for ATO lodgements
is vital to understanding a business’s solvency position.
It is important to note directors can become personally liable for a
company’s PAYG Withholding and Superannuation in the event that
lodgements are not filed within three months of the due date. If you are
a director of a company with overdue lodgements, it is imperative that
you discuss this matter with your adviser (or an insolvency practitioner)
immediately to ascertain your options.
Many businesses treat the ATO as a “bank” or an alternative source
of funding. It is important that the ATO is given the same respect as
other “trade” creditors which an entity may require to continue ongoing
trading.
When a liquidator is appointed to a company, he or she can recover
preferential payments made to creditors in the period leading up
to their appointment. Directors should note that, in the event that
their company suffers from an insolvency event, if there has been a
payment arrangement through which the company has been making
payments to the ATO, and the company has previously had a payment
arrangement with the ATO which had been broken, not only can a
liquidator recover the “preferential” payments from the ATO, but the
ATO will join the director personally to any recovery action brought by
the liquidator and has the power to sue the director personally for the
clawed-back amounts. Therefore, any entity that may be using the ATO
as an alternate funding source should analyse their solvency position
and discuss same with their advisers so that they can understand their
options.
Banks & Other Financiers
Obviously any amounts owing to Banks or Other Financiers are liabilities
that need to be accounted for on the balance s