Frequently Asked Questions

Does Bankruptcy Clear Tax Debt in Australia?

All monies owing to the Australian Taxation Office for taxes owing are caught by your bankruptcy.

Taxes owing includes monies you owe to the Tax Office personally and taxes you may also be liable for due to your company not paying taxes owing.

The only thing to watch out for is if you have outstanding tax returns to lodge. If you do not lodge your outstanding returns the ATO can have you prosecuted through the court for non-lodgement and if this happen you may receive a court fine. Court fines are not a provable debt in bankruptcy, and if you should receive a fine, you will have to pay it. The solution is to get your outstanding returns lodged as soon as possible. Remember you do not have to worry about monies owing to the Tax Office as they will be caught by your bankruptcy.

Tax returns do not need to be up to date when you file for bankruptcy. If you subsequently lodge a tax return which shows a tax liability from prior to when you became bankrupt, that debt will be included in your bankruptcy.

We find a lot of people file for bankruptcy to get protection from their creditors and then with no creditors phone calls to worry about, get in and lodge their outstanding tax returns.



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