Bankruptcy and the ATO

Bankruptcy

With an increasing number of people being declared bankrupt (either voluntarily or by a creditor obtaining a court order), it’s important to note that despite being declared bankrupt, certain debts are not extinguished and must be paid during and after your bankruptcy period including;

  • Court imposed penalties and fines.
  • Unliquidated damages you are liable to pay due to accidents (e.g a car accident).
  • Commonwealth student assistance debts (i.e HELP debts to the ATO), including supplement loans.
  • Debts you incur after your bankruptcy commences, and
  • Maintenance, including child support (but only after your bankruptcy ends).

With respect to ATO amounts that you owe:

  • Tax debts for the period before the date of bankruptcy are extinguished when you become bankrupt.
  • If the ATO has not issued and served a notice of assessment at the time of bankruptcy but there is a tax liability that has arisen before the time of bankruptcy, it is a contingent liability and is extinguished when you become bankrupt.
  • ATO debts arising from tax periods after your bankruptcy has commenced will not be extinguished.

Also be mindful that the ATO may keep any tax refund you are due and offset it against any debt you owe them or the Commonwealth (e.g. child support).

Unless you pay your debts in full, bankruptcy last for three years

dependents

Are you having financial difficulty?

Not feeling financially secure?

Don’t leave it until it’s too late!

Most people in today’s society are inundated with commitments from all areas of their lives and feel overwhelmed and stressed.

Generally, we want to make more money so that we can achieve the lifestyle of our choice – but is making more money really the answer?

Co-Director Michael Osborne talks about how our financially well organised program can help you.

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