ATO update: Personal Insolvency Agreements

While personal insolvency agreements (PIAs) can produce beneficial outcomes, the Australian Taxation Office (ATO) must ensure taxpayers meet their obligations in full where able and take action to ensure future compliance when payment in full is not possible.

When considering PIAs, ATO staff refer to PS LA 2011/16 Insolvency - collection, recovery and enforcement issues for entities under external administration. Decisions are based on a consideration of each taxpayer’s individual circumstances, the interests of the ATO, the interests of other creditors and the wider community.

 Some of the factors considered when voting on a proposal are:

  • the type of debt
  • the details of the proposal (such as dividend amount, source of funds, dividend timeframe)
  • outstanding amounts
  • any association between the debtor and other creditors
  • compliance history financial information contained in the proposal
  • the debtor’s personal circumstances.

One of the most common issues encountered when assessing PIAs occurs when tax lodgement obligations are not up to date. This makes the ATO debt difficult to quantify and will likely cause a vote against the proposal. 

The ATO will always indicate the reasons for voting no to a PIA (on the voting form) unless there are privacy concerns.

If you have a concern with the ATO’s voting position or would like to discuss a matter, please email InsolvencyPractitionerServices [at] ato.gov.au

More information 

For general information refer to the insolvency practitioners’ section on ato.gov.au/Tax-professionals/Your-practice/Insolvency-practitioners