WHY IS THE ATO ABLE TO OFFSET A TAX REFUND POST BANKRUPTCY?
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| Filling bankruptcy is an important decision, so applicant should be very cautious and should have proper mind to do the same. First of all you must provide all the information and details related to your bankruptcy to the attorney. |
On the bankruptcy of an individual one of the general intentions of the Bankruptcy Act 1966 is to free an insolvent person from his or her financial obligations arising from debts incurred prior to bankruptcy that they are unable to meet. Generally a creditor with a provable debt is prevented from continuing any recovery proceeding against a debtor upon their bankruptcy. There are very limited exceptions. Debts owed to the ATO are provable so why is the ATO able to apply a credit against a debt that is provable in the bankruptcy? The ATO relies on Section 8AAZL of the Taxation Administration Act 1953 which allows the Commissioner to apply the credit entitlement in reduction of an amount due under a taxation law. Why should the ATO be in a better position then any other unsecured creditor in the bankruptcy? The ATO relies on the Full Federal Court decision in Taylor v DFC of T 87 ATC 4441 to allow the Commissioner to apply post bankruptcy credits against pre bankruptcy debts until: • th
