As the world begins to ‘live with’ Covid-19, the leniency once afforded by the Australian Tax Office has now come to an end; and it will be sorely missed. For quite some time, the ATO were gladly waiving penalties and interest on tax debts, even reducing their overall debt collection activities. However, as their usual operations have been reinstated there has been an increase in the number of payment plan requests being declined; stumping businesses that only had a ‘Plan A’. Fortunately, there are other options available.

Why Is It Important To Make A Plan B?

Without an alternative strategy, you are at risk of the ATO taking more serious debt recovery action against you and your business including, but not limited to:

  • Director Penalty Notices

DPNs are issued to Directors of companies that have failed to meet their tax obligations, such as paying employee superannuation contributions. They have the potential to make a Director personally liable with a limited amount of time to respond or settle the debt.

  • Garnishee Notice
    A garnishee notice is a document issued by the Australian Tax Office (ATO) to any third party that is holding money for, or owing money to you when you have an outstanding tax debt. This notice allows the ATO to bypass you, legally ordering the third party to pay the amount related to your tax debt directly to them.

  • Statutory Demand
    A statutory demand is a formal order that can be issued by a creditor, ordering the outstanding debt to be paid within 21 days. Failure to pay can result in further legal action being taken against the debtor, including wind-up proceedings.

What Other Options Are Available?

Debt Negotiation

Even if you are unable to attain a payment plan, you may be able to negotiate down the interest, penalties or the tax debt itself. At Tax Negotiators, we can represent you and negotiate on your behalf to reach a financially manageable situation for you and your business.

Informal Business Restructuring

Informal restructuring involves an independent company working with your business to make internal, organisational changes in order to improve process and increase profitability; strengthening your business’s financial position so that it is able to repay its debt.

Small Business Restructuring Process (SBRP)

Introduced in July 2021, the SBRP is a new restructuring process that allows businesses enlist the help of an independent practitioner to reduce debts without the threat of creditors being able to take legal action. Compared to other restructuring processes, SBRP is a lower cost option and the process only takes approximately seven weeks. However, to be eligible for SBRP the business must:

  • Have liabilities totalling no more than $1 million
  • Be insolvent or is becoming insolvent
  • Comply with tax lodgement and employee entitlement obligations
  • Not be under another form of restructuring process

Voluntary Administration

During voluntary administration, an independent practitioner is appointed by the company directors to assess all options and provide the best outcome possible. In some cases, this may mean the business can be saved, however if not, their responsibility is to offer a better return to creditors on outstanding debts than if the company had been sold and liquidated immediately.

What To Do Next?

With over 50 years of collective industry experience, the team at Tax Negotiators are focused on providing specialised, professional and current advice to its clients through our direct services. If your business is struggling with a tax debt, contact us here today!


ASIC. ‘Voluntary Administration A Guide For Creditors’, ASIC, Online, 2020, (Accessed 11 August 2022)