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Cross border recovery of taxation debts

Cross border recovery of taxation debts

An ATO update reflects the ongoing expansion of global co-operation regarding the administration and collection of tax.

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The Australian Taxation Office (ATO) released an update to Law Administration Practice Statement PS LA 2011/13 on 15 August 2019 regarding cross border recovery of taxation debts.

PS LA 2011/13 outlines the options available to ATO officers for the recovery of tax related liabilities where the person who owes the tax liability is outside Australia (the debtor). The Practice Statement also deals with the ATO’s responsibilities for recovering debts on behalf of foreign tax regulators.

PS LA 2011/13 provides guidance regarding the following debt recovery options:

  • the domestic tax law provisions that empower recovery of tax debts (such as issuing garnishee notices to third parties who owe money to the debtor);
  • the powers of liquidators and trustees in bankruptcy to pursue investigations in foreign jurisdictions as to the debtor’s assets in those jurisdictions;
  • the ability to seek assistance from other jurisdictions under Australia’s bilateral treaties and the multilateral Convention on Mutual Administrative Assistance in Tax Matters (Multilateral Convention); and
  • the mechanisms in place to seek enforcement of debts in a foreign state (and vice versa).

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