Tax debt, DPNs & winding-up applications
The ATO is back in aggressive collection mode, and tradies are squarely in its sights.
Director Penalty Notices (DPNs) make you personally liable for the company’s unpaid PAYG withholding, GST and superannuation guarantee charge.
A standard DPN gives you 21 days to pay, appoint a voluntary administrator, appoint a small business restructuring practitioner, or place the company into liquidation.
A lockdown DPN gives you nothing — personal liability is already locked in and cannot be remitted by appointing an external administrator.
SEE MORE: Tradie Tough Tests
The trigger for lockdown is failing to lodge BAS, IAS or SGC statements within the statutory window.
The lesson: lodge on time, every time, even if you can’t pay the liability.
Winding-up applications are the ATO’s next escalation. Once an application is filed in the Federal Court, your bank lines freeze, finance dries up, and the matter becomes public on ASIC.
Defending the application typically costs more than dealing with the debt early.
If you’re behind on tax, act now. The earlier you engage — through a payment plan, voluntary administration, or small business restructuring — the more options remain on the table.
Progress payment claims & spotting a builder in trouble
If you subcontract to a head builder, your cash flow is only as good as theirs.
Watching for early warning signs is the difference between getting paid and joining the creditor queue.
Red flags worth taking seriously: payments slowing or arriving in odd part-amounts; requests to ‘hold off invoicing until next month’; retention monies overdue; suppliers walking off site; key office staff resigning; site shutdowns blamed on ‘bank delays’; and excuses that change every fortnight.
One of these may mean nothing — two or more are a serious warning.
Use the tools available. Run an ASIC search for recent changes in directors or registered office.
Run a PPSR search to see who already holds security over the builder’s assets. Check court records for any winding-up applications on foot. Consider a paid creditor-watch service for material exposures.
Most importantly, use your state’s Security of Payment legislation properly.
Issue payment claims on time, in the prescribed form, and follow up with adjudication if a payment schedule isn’t received.
Those rights expire quickly.
Once a builder enters administration, your statutory entitlements are often the strongest position you have.
Small business restructuring — A lifeline, not a loophole
Small Business Restructuring (SBR), introduced under Part 5.3B of the Corporations Act in January 2021, was designed for businesses exactly like a tradie’s company — viable in normal trading, but weighed down by tax debt or a bad job that won’t clear.
The headline features: directors stay in control of the business, you appoint a Restructuring Practitioner to oversee the process, you have 20 business days to put a plan to creditors, and creditors then have 15 business days to vote.
If accepted, the plan binds all unsecured creditors — including the ATO — and the company trades on.
Eligibility is strict.
Total liabilities must not exceed $1 million.
Employee entitlements (including superannuation) must be paid up to date. Tax lodgements must be current.
The directors must not have used the SBR or simplified liquidation process in the previous seven years.
SBR is a powerful tool for the right business.
It is not suitable where the underlying trade is unviable, where liabilities exceed $1 million, or where employee or super obligations remain unpaid.
Used at the right time, it can save the business.
Get in touch
For free confidential consultation, contact Atlee Carter Advisory on 1300 083 730, or email info@atleecarter.com, or visit here
