I have an old friend who has significant health issues but unsure whats going to happen. 

 

One of his worries is that he has a sizeable penalty to pay to the ATO and doesn't have the dosh to pay it. 

 

If he doesnt pay it what will happen? Will they proceed to bankruptcy? Actually he is more worried about them revoking a passport. Can they do this?

 

thanks

Moving to the Home Country forum. 

If you are an Australian citizen I doubt a passport can be revoked for any reason, certainly not by the ATO for owing them money.

They can freeze bank accounts or garnish income such as pensions. I would strongly doubt the ATO would have the power to revoke a passport, that's the bailiwick of the Department of Home Affairs. Or DFAT.

What would the ATO gain by revoking his passport? If he is deported to Australia, Border Force would not let him in.

Usually, the ATO prefers to stay out of the limelight with negotiated settlements. Your friend may be better off contacting them to explain his situation. They do allow tax debts to be paid off by instalment.

ATO cannot revoke a passport.  Only DFAT and the Ministry of Home affairs has the power to request a passport be revolked.

 

 

 

 

There are several articles online about people being stopped from leaving Australia by the ATO . The highest profile one was Paul Hogan who was stopped from leaving till he settles his tax debt. Same with people owing child support. They do not need to take your passport. They just have power to hold you. 

Just go bankrupt wipe ATO debt.

Heaps people do it in Australia.

21 minutes ago, Bruce Aussie Chiang Mai said:

Just go bankrupt wipe ATO debt.

Heaps people do it in Australia.

Agree, but depends if the 'friend' returned to Oz, Would not be permitted to leave without permission during the bankruptcy period, usually 3 years, but can be more

19 hours ago, Bruce Aussie Chiang Mai said:

Just go bankrupt wipe ATO debt.

Heaps people do it in Australia.

IN AUSTRALIA  going bankrupt does not clear a tax dept. further more they can raid your bank accounts & also seize any money owing to you from a third party. the ATO have very broad powers.

7 minutes ago, agrow said:

IN AUSTRALIA  going bankrupt does not clear a tax dept.

Are you sure?

 

You can go into bankruptcy voluntarily by filing a debtor's petition with the Australian Financial Security AuthorityExternal Link.

 

https://www.ato.gov.au/general/paying-the-ato/if-you-don-t-pay/#Bankruptcynotice

Governments have many ways of making life uncomfortable. I knew of a Swiss national residing in Thailand who owed the Swiss tax authorities money, he disputed this through the courts and lost so he left for Thailand, after two or three years shortly before his passport ran out he went to the Swiss embassy to renew it, they refused saying he had to return to Switzerland to settle his tax bill, they would only give him an emergency passport document valid for one trip to Switzerland. He was left with no choice but to return. You can't beat the system, it's been around longer than you have.

On 7/11/2020 at 6:14 PM, giddyup said:

If you are an Australian citizen I doubt a passport can be revoked for any reason, certainly not by the ATO for owing them money.

If you hold dual citizenship the minister has the power to revoke the Australian citizenship for terrorist related offenses, which means you lose the passport, but not if it would leave you stateless.

The ATO as you say does not have that power.

22 hours ago, Bruce Aussie Chiang Mai said:

Just go bankrupt wipe ATO debt.

Heaps people do it in Australia.

Only problem with that is once declared bankrupt your passport is automatically cancelled, and I know this from personal experience many moons ago.

2 hours ago, agrow said:

IN AUSTRALIA  going bankrupt does not clear a tax dept. further more they can raid your bank accounts & also seize any money owing to you from a third party. the ATO have very broad powers.

Incorrect. 

Does Bankruptcy clear ATO debt?

AFSA explained that most ATO debts are covered by bankruptcy. This means they do not have to be repaid (except in certain circumstances). The ATO would still be a creditor in the bankruptcy, which meant that if any money became available to pay creditors, the ATO would get a share.

2 hours ago, agrow said:

IN AUSTRALIA  going bankrupt does not clear a tax dept. further more they can raid your bank accounts & also seize any money owing to you from a third party. the ATO have very broad powers.

If it is the case that Australia does not allow you to go bankrupt because of unpaid taxes, it must be the only Western country that does that. Remember going bankrupt means closing your bank accounts - in some jurisdictions they leave you with one very basic account and often no ATM card for up to a year and many other restrictions. Your assets are sold off, your accounts are cleaned out and all is used to give to your creditors with the tax office usually getting preference. In many countries, the tax office will threaten, among other things, to bankrupt you.

Short answer......No, and they can't garner his pension!

Anyone who has any debt to any Australian government department can be denied the right to leave the country until such time as that debt has been finalized or arrangements are made. A notice is sent from the government department to all exit immigration points and the person is stopped at that point from leaving the country. The persons passport is not cancelled but a not allowed to exit notice is posted. The government department that is owed the debt is notified that the person attempted to leave the country.

1 hour ago, TPI said:

Short answer......No, and they can't garner his pension!

True they can't take his passport but they can stop him leaving.

4 hours ago, agrow said:

IN AUSTRALIA  going bankrupt does not clear a tax dept. further more they can raid your bank accounts & also seize any money owing to you from a third party. the ATO have very broad powers.

Unless the law has changed in Australia, Bankruptcy does clear Tax debt but does not clear Child support. The tax Dept cannot revoke your passport but can prevent you from leaving the country

 

AFSA explained that most ATO debts are covered by bankruptcy. This means they do not have to be repaid (except in certain circumstances). The ATO would still be a creditor in the bankruptcy, which meant that if any money became available to pay creditors, the ATO would get a share.

2 hours ago, TigerandDog said:

Only problem with that is once declared bankrupt your passport is automatically cancelled, and I know this from personal experience many moons ago.

No it is not. The ATO or the bankruptcy trustees have no authority to cancel or request that your passport be cancelled. However, to travel overseas, you are SUPPOSED to get permission from the trustee. If I remember correctly, the only reason the Australian Government will revoke your passport is if you fight in a war against Australia.

5 hours ago, Russell17au said:

Anyone who has any debt to any Australian government department can be denied the right to leave the country until such time as that debt has been finalized or arrangements are made. A notice is sent from the government department to all exit immigration points and the person is stopped at that point from leaving the country. The persons passport is not cancelled but a not allowed to exit notice is posted. The government department that is owed the debt is notified that the person attempted to leave the country.

They can and do cancel a bankrupt's passport. As stated previously I know this from my own personal experience back in the 80's. The bankruptcy court is required to notify both the ATO & Foreign Affairs/Immigration that a person has been declared bankrupt. They also have your credit reference flagged that you are a bankrupt, so you can't obtain a loan, and so that creditors can see that you are bankrupt. It is actually illegal for a creditor to pursue payment of a debt once a person has been declared bankrupt. If they hold a passport it IS cancelled. In my case I was advised by my solicitor to take my passport to the bankruptcy court with me. The judge asked  if I had a passport and when I answered "yes" I was ordered by the judge to hand the passport to the clerk of the court before departing so that it could be forwarded to Foreign Affairs to be cancelled.

 

Now if you happen to be overseas when this occurs, you are still able to return to Oz. However, Immigration will have it flagged in their database that you have been declared bankrupt, they will allow you to enter Oz BUT they WILL confiscate your passport at that point. On the flip side, the bankruptcy court is also required to notify the ATO & Foreign Affairs/Immigration & the credit reporting bureau when the bankruptcy has been discharged. You will then receive a letter from both the bankruptcy court & Foreign Affairs/Immigration confirming the bankruptcy has been discharged and that you are free to apply for a new passport if you so desire.

 

Once your bankruptcy has been discharged the ONLY condition that impacts a person is that they CANNOT apply for a loan or credit card until 7 years after the bankruptcy has been discharged.

 

As for not being able to leave the country until the debt is finalised or arrangements are made, that is not correct. You are not allowed to leave the country whilst you are a bankrupt, generally 3 years before being discharged, but sometimes longer, and that is because your passport has been cancelled, not because your debt is not finalised. Most bankrupts NEVER repay their debts as they don't have the means to do so. Bankruptcy eliminates the debts in entirety, so they don't necessarily have to be repaid partially or in full. That is dependant on each individual's financial situation, employment and amount of indebtedness.  If you are working they cannot even garnishee your wages, unless you are earning over a predetermined salary threshhold, and even if they are able to it's only cents on the dollar. A creditor will NEVER receive 100% of the debt that is owed.

 

Also the ATO will generally not be the ones to instigate bankruptcy proceedings as they know by doing so they would most likely never be able to recover the tax debt. Usually it is a creditor or the individual themselves that files for bankruptcy.

 

As stated previously, I write this based on MY experience as a former bankrupt and how it impacted me.

11 hours ago, TPI said:

No, and they can't garner his pension!

I am not Australian but that's what I would think. That's a person's  means to keep body and soul together. It would be straying into human rights territory to try to garner his pension.

 

In fact, there was a case where I worked in Thailand that a fellow in the HRO embezzled a huge part of the company's PF moneys. He was charged and convicted but the company couldn't touch a baht of his salaries due, PF, etc, as restitution. Court wouldn't allow that.

23 hours ago, simple1 said:

Are you sure?

 

You can go into bankruptcy voluntarily by filing a debtor's petition with the Australian Financial Security AuthorityExternal Link.

 

https://www.ato.gov.au/general/paying-the-ato/if-you-don-t-pay/#Bankruptcynotice

I'd say he's sure but he's wrong

17 hours ago, TigerandDog said:

They can and do cancel a bankrupt's passport. As stated previously I know this from my own personal experience back in the 80's. The bankruptcy court is required to notify both the ATO & Foreign Affairs/Immigration that a person has been declared bankrupt. They also have your credit reference flagged that you are a bankrupt, so you can't obtain a loan, and so that creditors can see that you are bankrupt. It is actually illegal for a creditor to pursue payment of a debt once a person has been declared bankrupt. If they hold a passport it IS cancelled. In my case I was advised by my solicitor to take my passport to the bankruptcy court with me. The judge asked  if I had a passport and when I answered "yes" I was ordered by the judge to hand the passport to the clerk of the court before departing so that it could be forwarded to Foreign Affairs to be cancelled.

 

Now if you happen to be overseas when this occurs, you are still able to return to Oz. However, Immigration will have it flagged in their database that you have been declared bankrupt, they will allow you to enter Oz BUT they WILL confiscate your passport at that point. On the flip side, the bankruptcy court is also required to notify the ATO & Foreign Affairs/Immigration & the credit reporting bureau when the bankruptcy has been discharged. You will then receive a letter from both the bankruptcy court & Foreign Affairs/Immigration confirming the bankruptcy has been discharged and that you are free to apply for a new passport if you so desire.

 

Once your bankruptcy has been discharged the ONLY condition that impacts a person is that they CANNOT apply for a loan or credit card until 7 years after the bankruptcy has been discharged.

 

As for not being able to leave the country until the debt is finalised or arrangements are made, that is not correct. You are not allowed to leave the country whilst you are a bankrupt, generally 3 years before being discharged, but sometimes longer, and that is because your passport has been cancelled, not because your debt is not finalised. Most bankrupts NEVER repay their debts as they don't have the means to do so. Bankruptcy eliminates the debts in entirety, so they don't necessarily have to be repaid partially or in full. That is dependant on each individual's financial situation, employment and amount of indebtedness.  If you are working they cannot even garnishee your wages, unless you are earning over a predetermined salary threshhold, and even if they are able to it's only cents on the dollar. A creditor will NEVER receive 100% of the debt that is owed.

 

Also the ATO will generally not be the ones to instigate bankruptcy proceedings as they know by doing so they would most likely never be able to recover the tax debt. Usually it is a creditor or the individual themselves that files for bankruptcy.

 

As stated previously, I write this based on MY experience as a former bankrupt and how it impacted me.

I respect your opinion but that was back in the 80s which was a long time ago. Laws change all the time

On 7/14/2020 at 10:55 AM, bbabythai said:

I respect your opinion but that was back in the 80s which was a long time ago. Laws change all the time

Australian bankruptcy laws are still the same as they were in the 80's, and it is not my opinion it IS my experience of being declared bankrupt back then.

2 hours ago, TigerandDog said:

Australian bankruptcy laws are still the same as they were in the 80's, and it is not my opinion it IS my experience of being declared bankrupt back then.

It might vary from state to state but having your passport confiscated/cancelled is not the case in WA.

This is way better than the situation for Americans.  They can find that when they are overseas and go to apply for a new passport, that the current one will be held and they will be issued an emergency travel document, valid for a one-way trip to the U.S. if they have a tax judgement against them and/or unpaid child support judgement.  Also, unpaid student loans and probably other debts can be deducted from someone's Social Security pension payment, but up to a limit of 15%.  

On 7/15/2020 at 12:49 PM, TigerandDog said:

Australian bankruptcy laws are still the same as they were in the 80's, and it is not my opinion it IS my experience of being declared bankrupt back then.

I dont agree with you. We are talking about 30 to 40 yrs ago. Your story and information is old and not relevant in year 2020. I will disregard your comment as because its out of date.