3 Findings

Review questions

Case management

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?

Explanatory note: IPS made an evaluation based on whether contact or an attempt to contact the taxpayer was made in the year prior to serving a bankruptcy notice or issuing a s459E notice.

Yes: 90 of 95 cases

No: 5 of 95 cases

Of the five cases above that were rated as ‘No’, legal warning letters were issued and attempts to contact the taxpayer were made however they were not made within the year prior to the commencement of formal insolvency proceedings.

Taxpayer viability

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?

Yes: 0 of 95 cases

No: 95 of 95 cases

Observations

Observations from the 95 cases reviewed are as follows:

• The ATO made attempts to contact the taxpayer in all 95 cases reviewed.
• Appropriate legal notices were issued to the taxpayer within the year prior to the initiation of insolvency proceedings in 90 of the 95 cases.
• In five cases the ATO did not appear to have made attempts to contact the taxpayer or provide sufficient legal warnings in the year prior to commencing formal insolvency proceedings.
• In all cases reviewed there was no evidence that the taxpayer was viable prior to the commencement of insolvency proceedings.
• 35 of the cases reviewed were individual bankruptcies and the remaining 60 were corporate insolvency cases.