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May-22-Newsletter

Practice Note: 31/05/2022

It has been widely reported that undisputed ATO debt has reached $34.1 billion and the ATO is now ramping up collection activities. This will lead to professionals receiving increasing inquiries from stressed clients who are unable to pay their tax debt.

Persons with swamping ATO debt do have options for the resolution of their debt. Everyone’s circumstances are different. For good decisions to be made, obtaining the correct information on available solutions is necessary.

FACT: To make the right decision for the resolution of insurmountable debt, available options need to be identified and correct information on each option is obtained.

INCORRECT INFORMATION: We have been made aware of incorrection information being provided to a person who has ATO debt.
It is a concern and inhumane for a person who is trapped by debt to be provided with incorrect information on available solutions.

  1. Money owing to the ATO is not cleared by bankruptcy. INCORRECT; Tax Debt owing when a person becomes bankrupt is captured and extinguished by the bankrupt estate.
  2. After discharge from bankruptcy, if an inheritance entitlement occurs, that money will have to be paid to the ATO INCORRECT; liability owing to the ATO is extinguished by bankruptcy. Once a person is discharged from bankruptcy, the bankrupt estate has no claim over assets the person then accumulates.
  3. After discharge from bankruptcy, if a lottery or gambling win occurs, that money will have to be paid to the ATO – INCORRECT. Once a person is discharged from bankruptcy, windfall gains are safe, they are not available to the bankrupt estate.
  4. Bankruptcy does not release a person from loan monies owing to their bank. Once discharged from bankruptcy the loan repayments to the bank must recommence. – INCORRECT; loan monies owing to the bank are extinguished by the bankruptcy.
  • For further information on ATO debt and bankruptcy, our article ‘Your Tax Debt and Bankruptcy\’ can be accessed here.
  • For further information on common misinformation on bankruptcy, our article \’Bankruptcy Option Explained\” can be accessed here.

INDEPENDENT ADVICE: To make the right decision for the resolution of insurmountable debt, independent and creditable advice is recommended.

Nicholls & Co are personal insolvency specialists. Personal insolvency is our sole area of practice. We have been in practice since 1987 and service all States and Territories of Australia.

Should any of your clients have ATO debt that they just cannot pay, we welcome your inquiry for our independent, creditable advice.

Swamping debt that cannot be paid is very dangerous for the person\’s health and wellbeing. It causes stress which can build over time to cause severe health, relationship, work, and socialisation problems.

ABC Radio: Alan Nicholls’ recent interview on ABC Radio, provides insight into the Nicholls & Co approach when we assist people to get past their severe financial problems. It can be accessed here

ASSISTANCE: If you have any questions, our initial complimentary advice can be accessed by calling 1300 060 122 or email: helpdesk@nichollsco.com.au

Copyright@2022 Nicholls Resources Pty Ltd. All rights reserved. Liability is limited by a scheme approved under the Professional Standards Legislation.

Past Practice Notes can be accessed Here

This newsletter is provided as general information only and is not advice. If you have questions or would like to have a chat you are welcome to give us a call on 1300 097 926 or email helpdesk@nichollsco.com.au

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