Review of ATO decisions to enforce insolvency - June 2018

1 Executive summary

You can download this publication in Portable Document Format (PDF) – download 2018 Insolvency Review – Overarching Report June 2018 (PDF 249KB)This link will download a file

• This report was prepared by Indigenous Professional Services (IPS) in respect of its engagement by the Australian Taxation Office (ATO) to independently review 95 insolvency cases selected randomly by the ATO on a national basis.
• The objective of the review was to provide an independent view as to whether the ATO’s insolvency actions are in accordance with legal requirements and ATO policy, in particular the content and direction of relevant ATO Practice Statement Law Administration policies (see section 2 for more details).
• The review involved an assessment against two specific questions that were determined by the ATO in relation to the legal recovery actions of the ATO in its management of insolvency cases:  
  • Question 1: Based on records available, did the ATO contact, or attempt to contact, the taxpayer with the opportunity to meet their obligations and discuss alternative arrangements prior to commencing formal insolvency proceedings?
  • The answer was 'yes' in the majority of case file reviews: 90 out of 95. In the five instances where the answer was no, the ATO did issue legal warning letters and made attempts to contact the taxpayer however they were not made within the year prior to commencement of the formal insolvency proceedings
  • Question 2: Based on records available, did the ATO proceed with formal insolvency proceedings despite evidence of the taxpayer being viable and having the capacity to repay the tax debt within a reasonable timeframe on a risk based approach?
  • The answer was 'no' in 95 out of 95 case file reviews.