Tax Debt Disputes QLD

Tax debt lawyers, Brisbane and Queensland-wide

A Director Penalty Notice lands with a 21-day clock already running. A garnishee notice can empty a bank account before you've had a chance to respond. The ATO has sharply increased enforcement against small business tax debt in recent years, and the options that protect you narrow fast once a notice arrives. Odyssey Legal helps directors and business owners across Queensland dispute, negotiate, or respond to ATO debt recovery action.

Director Penalty Notices, both typesGarnishee notices and ATO recovery actionActing Queensland-wide

Speak to our Experts: (07) 5370 8759 Start Fast-Track Assessment

Start with the Fast-Track Assessment

Five questions, about a minute. It tells us which notice you are holding, how many of the 21 days are left, and which of the options in front of you are still open.

A notice has arrived, or the company is behind. Start here.

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We will come back to you with which notice you are actually holding and what can still be done inside the time left. No obligation, and the first conversation is free.

The ATO does not need a court

Every other creditor on this site has to sue you first and win. The Commissioner of Taxation does not.

Following COVID-19, the ATO began cracking down hard on small business tax debt. Small business BAS debt now sits at roughly $8.5 billion in unpaid GST, $8.1 billion in unpaid PAYG Withholding, $5.5 billion in unpaid PAYG Instalments, and $1.9 billion in unpaid Superannuation Guarantee. That enforcement push has meant a sharp rise in Director Penalty Notices, garnishee notices, and court proceedings to recover the debt, along with more statutory demands and winding up applications against companies that owe.

What makes the ATO different from every other creditor is not how hard it pushes. It is that most of what it does next needs no court at all.

Four powers, and none of them need a judge

This is not a complaint about the ATO. It is the shape of the problem, and it is why the advice on this page is almost always about acting early rather than about arguing well.

s 14ZZK, s 14ZZOThe assessment is the debtA trade creditor has to prove you owe the money. The Commissioner assesses it, and from that point the amount assessed is the starting position. Both of the burden-of-proof provisions in Part IVC put the onus on the taxpayer: it is for you to show the assessment is wrong, not for the ATO to show it is right. If the ATO assesses that you owe $150,000, the legal starting point is that you owe $150,000.
s 260-5It can take money from a third partySection 260-5 lets the Commissioner require somebody who owes you money, most often your bank, to pay the ATO instead. No judgment, no court, no hearing. And the third party has no choice in it: section 260-15 indemnifies them for paying and section 260-20 makes failing to comply an offence. Asking your bank to hold off is asking it to commit an offence on your behalf.
Division 269It can make a director personally liableDivision 269 of Schedule 1 creates the director penalty. The liability arises automatically when the company misses its obligation, before anybody writes to you. What the notice does is open the door to recovery against you personally, and it does that 21 days later, again without a court deciding anything.
s 14ZZM, s 14ZZRObjecting does not stop any of itThis is the one that surprises people most, and it is the reason a dispute and a debt have to be managed as two separate problems at the same time. A pending review does not affect implementation of a taxation decision, and neither does a pending appeal. You can be objecting, correctly and successfully, while the garnishee notice is still operating.

None of that makes the position hopeless and it is not a reason to disengage. It is the reason engaging early is worth so much more here than it is with an ordinary creditor: almost every option that protects you is one you have to take before the ATO acts, not after. For comparison, our debt recovery page sets out what recovery looks like for a creditor who does have to sue you first, which is every creditor except this one. The provisions themselves are in the Taxation Administration Act 1953.

Speak to our Experts: (07) 5370 8759 Start Fast-Track Assessment

Director Penalty Notices: you have 21 days

A Director Penalty Notice (DPN) makes a company director personally liable for certain unpaid company tax debts, covering PAYG withholding, superannuation guarantee charge, and GST. The penalty is created automatically the moment the company misses its obligation. The ATO doesn't need to issue anything for the liability to exist, but it can't start recovery action against you personally until 21 days after the notice is issued.

Which options are open to you within that 21 days depends entirely on which type of notice you've received.

The company lodgedNon-lockdown DPN

When it's issuedCompany lodged its BAS, IAS or SGC statements on time, but didn't pay

Options within 21 daysPay in full, appoint a voluntary administrator, appoint a small business restructuring practitioner, or appoint a liquidator

After 21 daysPersonal liability is locked in if no action was taken

The company did not lodgeLockdown DPN

When it's issuedCompany failed to lodge those statements within the required timeframe

Options within 21 daysPayment in full is generally the only way to remove personal liability

After 21 daysLiability already applies; an insolvency appointment won't remove it

Four things that catch directors out repeatedly

The dateThe clock runs from the date sent, not the date readThe 21-day clock starts from the date the ATO sends the notice, not the date you receive or read it, so an outdated registered address is not a defence. Section 269-50 governs how the notice may be given, and it is given to the address on the ASIC register. A director who has moved and never updated it can lose most of the 21 days before learning the notice exists.
Co-directorsEach director is liable for the whole debtWhere a company has multiple directors, each one is jointly and severally liable for the full debt, meaning the ATO can pursue whichever director has the greater capacity to pay rather than splitting it evenly. If you are the director with a house, you are the one who gets pursued.
ContributionA director who pays can pursue the othersThe other half of that, and it is in none of the pages ranking for this term: section 269-45 gives directors rights of indemnity and contribution. Paying more than your share is not the end of the matter, and the time to understand what you can recover from your co-directors is before you pay rather than afterwards.
ResigningResigning does not erase itA DPN doesn't expire, and resigning as director doesn't erase liability for debts that arose while you held the role. Section 269-30 deals with the position where the obligation ends before the notice period does, and it does not operate as an exit. Resigning after the debt arose changes nothing about that debt.

The ATO publishes its own guide to this

The director penalty regime page is the first organic result on this search and it is accurate. Read it. What it will not tell you is which type of notice you are holding, whether a defence under section 269-35 is available on your facts, or what the date on it means for the options you have left.

The payment plan that is not a defence, and the one that is

Two things are worth knowing before the 21 days run out, and the search results for this notice get both of them wrong.

One recent and important change: entering a payment arrangement with the ATO no longer remits personal liability under a non-lockdown DPN. It used to. It doesn't now. If a payment plan is your instinct, it's worth understanding this before you rely on it as your response to the notice itself.

That matters more than it sounds, because a payment plan is the most natural thing in the world to reach for. It feels like engagement, it feels responsible, and the ATO will often agree to one. It simply is not an answer to the notice. A director can be paying an agreed instalment arrangement on time and still be personally liable at the end of the 21 days.

A payment arrangement is worth having. It is not an answer to the notice.

A payment arrangement is still worth having. It manages the company's debt and it is evidence of engagement. What it is not is a response to the notice, and the two need to be run as separate decisions inside the same 21 days. The ATO's own payment plan page is worth reading alongside this, because it explains what an arrangement does do.

s 269-35

You took all reasonable steps

The central defence, and the one most arguments are built on. It asks what you actually did to make the company comply, or to put it into administration or liquidation, and whether there was anything further a reasonable person in your position could have done. It is a defence about conduct and about timing, which means it is made or lost in the record: board minutes, correspondence with the accountant, the date you first raised the arrears, what you asked for and what you were told.

s 269-35

Illness, or another good reason you could not take part

Where a director did not take part in the management of the company at the relevant time because of illness or some other good reason. It is narrower than people hope: not being the one who handled the books is not, on its own, a good reason, and a director who was simply uninvolved is usually in a worse position rather than a better one. Where it genuinely applies, it needs contemporaneous evidence rather than a later account.

s 269-35

A reasonably arguable position on superannuation

Specific to the superannuation guarantee charge, and it goes to whether the company treated the superannuation legislation as applying in a way that was reasonably arguable. It is the defence most often available where the real dispute is about whether somebody was an employee or a contractor, which is a question a great many small businesses have got wrong in good faith.

The four that fail

What is not a defence

Worth stating plainly, because each of these is something directors arrive believing. A payment arrangement is not a defence. Not having received the notice is not a defence, because it is given to the ASIC address. Having resigned is not a defence to a debt that arose while you were in office. And not having been the director who dealt with the tax is not, by itself, a defence either.

A defence under section 269-35 is made or lost in the record rather than in the argument, which is why the time to think about it is inside the 21 days rather than after them. Note also that this is the director's exposure under the TAX Acts. The exposure under the Corporations Act, which is insolvent trading and its own separate defences, is on bankruptcy and insolvency. Section 269-55 confirms this Division does not limit or exclude the Corporations Act, so both can be running at once, and for a director in trouble they usually are.

Garnishee notices

A garnishee notice is one of the ATO's firmer recovery tools. It's directed at a third party, your bank, your employer, or a trade debtor who owes you money, requiring them to pay the ATO directly instead of paying you. You'll be served a copy so you know it's happened, but by the time it lands, the ATO has generally already made the decision to act.

For a business, this can mean trade debtors, merchant facility takings, and bank balances all get redirected at once, which is where cash flow problems turn into an existential threat to the business almost overnight.

One hitPoint-in-time notice

What it takesA single specified amount, or a percentage of a nominated account

How long it runsOnce. It is satisfied when the amount is paid

What that means for a businessA sum disappears without warning. Damaging, survivable, and it tells you the ATO has moved from correspondence to collection

Every paymentContinuing notice

What it takesEvery future payment into that account, as it arrives

How long it runsUntil the debt is cleared

What that means for a businessIncome stops reaching the business at all. Wages, suppliers and rent are all being paid out of an account the ATO is emptying as it fills

Waiting for a garnishee notice to arrive before engaging with the ATO is the single most common mistake we see. Early engagement genuinely changes the outcome. Once the notice is issued, the third party has no discretion and must comply.

Speak to our Experts: (07) 5370 8759 Start Fast-Track Assessment

Disputing or negotiating your tax debt

Tax debts are notoriously difficult to defend outright because of the conclusive evidence rule. In practical terms, if the ATO assesses that you owe $150,000, the legal starting point is that you owe $150,000, and the burden shifts to you to prove otherwise.

That doesn't mean there's no path forward.

We assist with

Not a menu to choose from. A matter frequently needs three of these running at the same time, which is the main reason tax debt work is harder to sequence than ordinary debt work.

ObjectDisputing a tax debt through the formal objection processPart IVC of the Taxation Administration Act is the pathway. Section 14ZU governs how an objection is made and section 14ZW when, and the time limit is real: an objection lodged late needs an extension, which is a separate application with its own argument. If the objection is refused, review goes to the Administrative Review Tribunal, which replaced the Administrative Appeals Tribunal, or on appeal to the Federal Court.
DefendDefending court proceedings brought to recover the debtWhere the ATO sues rather than using its own powers, it is ordinary recovery litigation with an unusual starting position, because the assessment does most of the Commissioner's work for it. What is left to argue is generally the amount, the identity of the liable entity, and whether a defence under the Act is available.
Statutory demandDisputing a statutory demand or contesting a winding up applicationA statutory demand founded on unpaid tax is still a statutory demand, with the same 21 days and the same four grounds to set it aside under the Corporations Act. That is a different 21 days from the DPN's, under a different Act, and a company can be inside both at once. Our statutory demands page sets out the grounds and the procedure.
NegotiateNegotiating a resolution, including payment plans and remissionsPayment plans and deferrals under the Commissioner's power to permit payment by instalments, and remission requests for penalties and interest. The ATO does have discretion to remit penalties and interest where there are valid reasons, such as exceptional circumstances or an administrative error on its part. Getting the request framed correctly, with the right supporting evidence, makes a genuine difference to whether it succeeds.

Objecting and owing are two separate problems and they have to be run at the same time. A pending review does not affect implementation of a taxation decision and neither does a pending appeal, so recovery can continue throughout. A dispute that is going well is not, on its own, protection from a garnishee notice. The ATO's guidance on objecting to a decision sets out the time limits, and a refused objection goes to the Administrative Review Tribunal, which replaced the Administrative Appeals Tribunal. Where the demand is a statutory demand, that is a different 21 days under a different Act.

Why choose Odyssey Legal?

Imagine the relief of finally knowing your legal troubles are in expert hands. Whether it's recovering money owed through our Letter of Demand or pursuing your rights through legal proceedings, you'll leave our consultation with certainty about your path forward and the confidence that comes from having expert litigation lawyers protecting your interests.

Queensland Law Society

Australian Restructuring Insolvency and Turnaround Association

Sunshine Coast Business Council

Legal Practice Director

Damon Laffin

Master of Laws majoring in Commercial Litigation

Admitted to the Supreme Court of Queensland

Admitted to the High Court of Australia

11+Years of Queensland experience

$1M+Recovered for clients

What that means in practice

Focused Expertise. At Odyssey Legal, our expertise is focused solely on Litigation, Dispute Resolution and Business, giving our clients precise and practical solutions tailored to the situation.

Proven Track Record. We've successfully resolved countless disputes and helped safeguard countless businesses, efficiently and effectively.

Expert Experience. Our team brings over a decade of litigation experience, having handled a variety of complex disputes. This translates directly into strategic insights that only come from years in the trenches.

Peace of Mind. From the first consultation, we provide clarity, confidence, and a clear path forward, so you can focus on what matters most and leave the legal headache to us.

Fast-Track Assessment

Act before the 21 days run out

A DPN or garnishee notice doesn't get easier to deal with by waiting, and the options genuinely narrow the longer it sits.

Five questions, about a minute. It tells us which notice you are holding, how many of the 21 days are left, and which of the options in front of you are still open.

Start Fast-Track Assessment

(07) 5370 8759

If a notice is already running, call rather than filling anything in. This is the one service on the site where the form is the slower option, and the 21 days do not pause while a message sits in an inbox.

Frequently asked questions

What is a Director Penalty Notice?

A Director Penalty Notice makes a company director personally liable for certain unpaid company tax debts, covering PAYG withholding, superannuation guarantee charge, and GST. Directors generally have 21 days from the date the notice is issued to act before personal liability is enforced.

The liability itself is created automatically when the company misses the obligation. The notice does not create it. What the notice does is let the ATO recover it from you personally, 21 days later.

What's the difference between a lockdown and non-lockdown DPN?

A non-lockdown DPN applies where the company lodged its statements on time but didn't pay, giving directors 21 days to pay the debt or appoint an administrator, restructuring practitioner, or liquidator to avoid personal liability.

A lockdown DPN applies where the statements themselves weren't lodged on time, and in that case payment in full is generally the only way to remove personal liability. It is the single most important thing to establish about a notice, because it decides whether an insolvency appointment is worth anything to you.

Can I avoid a DPN by setting up a payment plan with the ATO?

No, not anymore. Entering a payment arrangement no longer remits personal liability under a DPN. This is a recent change from ATO policy that catches many directors out, since a payment plan feels like a reasonable response but doesn't satisfy the notice itself.

A payment arrangement is still worth having for the company's debt. It is simply not an answer to the notice, and the two decisions have to be made separately inside the same 21 days.

What is an ATO garnishee notice?

A legal direction requiring a third party, such as your bank, employer, or a trade debtor, to pay money owed to you directly to the ATO instead. It can be a one-off payment or an ongoing arrangement that continues until the debt is cleared.

Can the ATO take money from my bank account without warning?

You'll be served a copy of any garnishee notice sent to a third party, so it isn't done without any notice at all. However, by the time the notice is issued, the ATO has generally already decided to act, which is why early engagement before that point matters.

The bank has no discretion once it receives one. Section 260-15 indemnifies it for paying and section 260-20 makes failing to comply an offence, so asking it to hold off is asking it to commit one.

Can I dispute a tax debt with the ATO?

Yes, if you believe the ATO has made an incorrect decision regarding your tax liability, you can lodge an objection or seek a review of the decision.

Tax debts are difficult to defend because of the conclusive evidence rule, which puts the burden on you to demonstrate the assessed amount is wrong rather than requiring the ATO to prove it's right.

What are the steps to dispute a tax debt?

The process typically involves reviewing the ATO's decision and gathering relevant documentation, lodging a formal objection within the stipulated time frame, and engaging in dispute resolution processes such as in-house facilitation or independent review.

If it remains unresolved, review goes to the Administrative Review Tribunal, which replaced the Administrative Appeals Tribunal, or on appeal to the Federal Court.

Does lodging an objection stop the ATO recovering the debt?

No, and this catches people out badly. A pending review does not affect implementation of a taxation decision, and neither does a pending appeal. Recovery action can continue while the objection is on foot.

In practice that means a dispute and a debt are two problems to be managed at the same time rather than one after the other. An objection that is going well is not protection against a garnishee notice.

Can the ATO remit penalties and interest charges?

Yes, you can request the ATO to remit (reduce or cancel) penalties and interest charges if there are valid reasons, such as exceptional circumstances or administrative errors.

A well-supported remission request can make a meaningful difference to the total debt. How it is framed and what it is supported by matters a great deal to whether it succeeds.

Can I negotiate a payment plan for my tax debt?

Yes, the ATO offers payment plans based on your financial situation. It's advisable to engage early and provide accurate financial information to negotiate favorable terms. The ATO also offers alternative avenues for resolution, including remission requests or deferred payment requests.

One caution, because it is the most common mistake we see: a payment arrangement does not remit personal liability under a Director Penalty Notice. If a DPN is running, the payment plan and the notice need separate responses.

What should I do if I receive a tax debt notice?

Review the details carefully, seek legal advice promptly, and engage with the ATO to discuss payment options or dispute mechanisms. Avoid ignoring the notice, as delays can lead to escalated recovery actions.

If it is a Director Penalty Notice, the first thing to establish is the date on it and whether it is lockdown or non-lockdown, because those two facts decide everything else.

What are the consequences of not addressing a tax debt?

Ignoring a tax debt can lead to serious consequences, including legal action and court proceedings, garnishee notices on your bank accounts, director penalty notices for company directors, and bankruptcy or winding-up proceedings.

Ignoring a tax debt tends to accelerate rather than avoid the consequences, because most of the ATO's next steps do not need a court and therefore do not wait for one.

What is a tax debt dispute?

A tax debt dispute arises when a taxpayer disagrees with the Australian Taxation Office (ATO) regarding the amount of tax owed, including assessments, penalties, or interest charges.

Does resigning as a director get rid of a DPN?

No. A DPN doesn't expire, and resigning as director doesn't erase liability for debts that arose while you held the role. Section 269-30 deals with an obligation ending before the notice period does, and it does not operate as a way out.

Resigning after the debt arose changes nothing about that debt. It may affect debts arising afterwards, which is a different question and one worth getting advice on separately.

How can Odyssey Legal assist with tax debt disputes?

Odyssey Legal provides expert legal advice and representation in tax debt disputes, helping clients navigate the objection process, negotiate payment arrangements, and represent them in tribunals or courts if necessary.

Fixed-fee options and a free 15-minute initial consultation mean you can find out exactly where you stand before committing to anything.

Related information

Director penalties, Australian Taxation OfficeThe ATO's own page on the director penalty regime, and the result at position one on this search. Linked rather than competed with Taxation Administration Act 1953Division 269 of Schedule 1 is the director penalty regime, section 260-5 is the garnishee power, and Part IVC is the objection pathway Object to an ATO decisionThe ATO's own guidance on lodging an objection, and the time limits that apply to one Administrative Review TribunalWhere a refused objection goes for review. It replaced the Administrative Appeals Tribunal, which most pages on this subject still name Bankruptcy and insolvencyThe director's other exposure, under the Corporations Act rather than the tax Acts: insolvent trading, safe harbour and unfair preferences. Section 269-55 confirms the two run alongside each other Statutory demandsA statutory demand founded on unpaid tax has its own 21 days under a different Act, and its own four grounds to set it aside Debt recoveryWhat recovery looks like for a creditor who does have to sue you first, which is every creditor except this one ATO payment plansThe ATO's own payment plan page. Worth reading alongside the caution above about what a payment arrangement does not do