Vendor owes a bucketload of money to ATO

[Paul@PFI]

In that case the big difference is the Vendors unwillingness to give the ATO a cent.

Therefore they would rather keep their house as an asset than give it to the ATO.. I can imagine once you've paid the ATO it would be very difficult to get it back.

What's interesting is they tried to quietly sell it. I could speculate that they didn't think they ATO debt was officially owed yet since it was still being challenged, maybe this is why they weren't worried about selling?

Even if the sale went though, holding cash is a risk, since the ATO can just garnish it from their bank account. Unless they planned to send it overseas

In my case the vendor had no problem paying the ATO, although it was probably sooner than they wished!

I would argue if this happens the ATO would sieze it and sell it. If the are concerned enough to garnishee funds they will proceed to sieze quickly if the sale stops.

The ATO team monitors property owned by creditors.

 

[Ausprop]

As has been stated, it makes it a bit tricky but is not unusual. The ATO still wants the sale to proceed as it will give them funds so just see your solicitor ASAP and they will make sure it's attended to.

EDIT. Sorry didn't read to the end of all the posts! Good to hear you settled.

don't assume the ATO will at logically and in their own self interest. my lawyer recounted one case to me along the lines of.... client owes $300kto ATO, they agree to 3 instalments of $100k, first 2 instalments paid, fail to make last. ATO says where is it, client pleads for more time, ATO says get stuffed pay now or else we will wind up the company. ATO is remineded thattheir first 2 instalments are preferrential creditor payments, client can make last payment but just need more time, ATO says no, winds up company. One of the first letters from liquidator is to the ATO... please return your preferential payments and have a nice day

 

[Ausprop]

presumably your lawyers confirmed that the ATO no longer holds an equitable interest in the property?

 

[datto]

I would argue if this happens the ATO would sieze it and sell it. If the are concerned enough to garnishee funds they will proceed to sieze quickly if the sale stops.

The ATO team monitors property owned by creditors.

I think ATO would need to go through the normal debt recovery procedures to do that ie enter judgement, bankruptcy.

I know that years ago, a flambouyant doctor was cleaned up by the ATO but I'm sure it was via legal channels perhaps a writ of execution.

 

[Scott No Mates]

I know that years ago, a flambouyant doctor was cleaned up by the ATO but I'm sure it was via legal channels perhaps a writ of execution.

Execution was too good for him.

 

[jrc]

don't assume the ATO will at logically and in their own self interest. my lawyer recounted one case to me along the lines of.... client owes $300kto ATO, they agree to 3 instalments of $100k, first 2 instalments paid, fail to make last. ATO says where is it, client pleads for more time, ATO says get stuffed pay now or else we will wind up the company. ATO is remineded thattheir first 2 instalments are preferrential creditor payments, client can make last payment but just need more time, ATO says no, winds up company. One of the first letters from liquidator is to the ATO... please return your preferential payments and have a nice day

You might not have the full story. There is often a history of failure to pay tax on time and past broken payment arrangements. Also if there is an arrangement to pay you are also obliged to meet your current obligations to remit PAYG etc. Was this happening? Had they complied with their obligations to file BAS and IAS? If thry didn't have the full $100,000 did they make a part payment?

The taxpayer is a company. So either the directors have got a notice saying if the debt isn't paid within 14 days the directors will be liable for the tax debt unless an administrator is appointed or the ATO has issued a statutory demand requiring payment within 21 days. Looks to me like it was the directors' choice not to raise money from outside the business to pay the debt.

Let's also think of what makes up most of the money the company is obliged to remit to the ATO:
a. PAYG - money deducted from the employees' wages, not the employer's money
b. Net GST collected from sales made by the business, not part of the business income.
c. Possibly superannuation entitlements that have not been paid
d. tax on anticipated profit of the company, which would be a small fraction of a and b.

Even if your lawyer's client was right about its ability to trade out of the situation, how are they going to expect the ATO to tell the difference between someone with a genuine ability to trade out or refinance and the otherswho are either stringing theATO on or are just hoping something will turn up.

http://www.smartcompany.com.au/fina...-to-get-but-be-careful-what-you-wish-for.html

 

[Ausprop]

You might not have the full story. There is often a history of failure to pay tax on time and past broken payment arrangements. Also if there is an arrangement to pay you are also obliged to meet your current obligations to remit PAYG etc. Was this happening? Had they complied with their obligations to file BAS and IAS? If thry didn't have the full $100,000 did they make a part payment?

The taxpayer is a company. So either the directors have got a notice saying if the debt isn't paid within 14 days the directors will be liable for the tax debt unless an administrator is appointed or the ATO has issued a statutory demand requiring payment within 21 days. Looks to me like it was the directors' choice not to raise money from outside the business to pay the debt.

Let's also think of what makes up most of the money the company is obliged to remit to the ATO:
a. PAYG - money deducted from the employees' wages, not the employer's money
b. Net GST collected from sales made by the business, not part of the business income.
c. Possibly superannuation entitlements that have not been paid
d. tax on anticipated profit of the company, which would be a small fraction of a and b.

Even if your lawyer's client was right about its ability to trade out of the situation, how are they going to expect the ATO to tell the difference between someone with a genuine ability to trade out or refinance and the otherswho are either stringing theATO on or are just hoping something will turn up.

http://www.smartcompany.com.au/fina...-to-get-but-be-careful-what-you-wish-for.html

my understanding was it was non-recourse against the directors so presumably GST or company income tax. Either way, ATO lost $200k and wrote off any prospect of the remaining $100k, I can't see any logic in that. At least keep the $200k and shut up.

If a company owes you money and they have cashflow difficulties, one sure fire way of doing your dough is to liquidate the company... it's only ever of satisfaction value

corporate insolvency laws and procedures in this country do the economy enormous damage. Speaking to an electrician recently, was owed money by a small but well known business in WA, his debt was about $70k I think. A creditor with no material skin in the game wound up the company for the sake of $5k and everyone lost out. So now we have businesses that have lost their debtors, one less business around, a director now madly fire selling his personal assets to meet any demands made from creditors smart enough to secure their debts

 

[jrc]

my understanding was it was non-recourse against the directors so presumably GST or company income tax. Either way, ATO lost $200k and wrote off any prospect of the remaining $100k, I can't see any logic in that. At least keep the $200k and shut up.
"]Agreed if an individual was owed $300K and got $200K it would be tempting to wait 6 months before taking further action. The ATO has probably gained millions in revenue from its debtors who are scared of its powers
If a company owes you money and they have cashflow difficulties, one sure fire way of doing your dough is to liquidate the company... it's only ever of satisfaction value
Agreed, normally any form of extnal debt recovery gives an unsatisfactory result to the creditor

corporate insolvency laws and procedures in this country do the economy enormous damage. Speaking to an electrician recently, was owed money by a small but well known business in WA, his debt was about $70k I think. A creditor with no material skin in the game wound up the company for the sake of $5k and everyone lost out. So now we have businesses that have lost their debtors, one less business around, a director now madly fire selling his personal assets to meet any demands made from creditors smart enough to secure their debts

$5K might be a material amount to that creditor, if the company couldn't come up with that small amount then they were probably trading insolvent. When money is tight you pay as many of your local and small creditors as possible to try and preserve your reputation and also to relieve the stress on your creditors' clerk who is fielding the phone calls

You come to arrangements with your large creditors, try not to over promise and keep them informed

Once you get into the hands of an insolvency firm of accountants any potential to trade out of your difficultiesr is basically eliminated by their fees. I was talking to a creditor of a company that went into voluntary administration, within the first week the administrators had run up $180,000 trying to work out the position

Your signature line sums it up