My business owes the ATO. What happens now?

Interest starts accruing (the ATO's general interest charge, reset quarterly and compounding daily), and the ATO begins its collection process. It escalates in stages: reminders, then firmer contact, then formal action such as a director penalty notice, a garnishee notice to your bank or debtors, disclosure of the debt to credit reporting bureaus, or ultimately statutory demand and wind-up proceedings. The single biggest factor in how far it goes is whether you engage early. Debts that are being actively discussed with a payment plan in place are treated very differently to silence.

Yes, and for many businesses that is the right first move. The ATO offers self-service payment plans through Online services for business and through the ATO app, and businesses with smaller debts can often set one up without speaking to anyone. There is also a payment plan estimator on ato.gov.au that shows the instalments and the interest before you commit. It costs nothing, and you do not need an accountant to do it. Where it stops being enough is when the debt is large, when lodgements are outstanding, when you have defaulted on a plan before, or when the business cannot realistically service the instalments - that is when advice earns its money.

A director penalty notice (DPN) is how the ATO makes a company's unpaid PAYG withholding, GST and superannuation guarantee charge your personal liability as a director. There are two kinds, and which one you get depends entirely on whether the company lodged on time. If the relevant BAS or SGC statements were lodged within the required window, you generally receive a non-lockdown DPN, and options beyond paying remain open. If they were not lodged, it is a lockdown DPN and the liability is locked to you personally - essentially only payment removes it. This is the strongest practical argument for lodging even when you cannot pay.

21 days - and the critical trap is that the clock runs from the date on the notice, not the date you receive it. The ATO sends DPNs to the director address recorded with ASIC, so an out-of-date ASIC address can burn most of the period before you ever see the letter. If you are a director, keeping your ASIC address current is genuinely one of the cheapest risk controls available to you. If a DPN has arrived, treat it as urgent and get advice the same week.

Yes. Where a business has an ABN, owes above a threshold amount that is overdue by more than 90 days, and is not effectively engaging with the ATO to manage it, the ATO can disclose the debt to registered credit reporting bureaus. The ATO notifies the business in writing first and gives a window to act. The phrase that matters is 'not effectively engaging' - a debt under an active payment plan is generally not disclosed. The practical consequence of disclosure is on your ability to get finance, which is often more damaging than the debt itself.

It is a formal insolvency process, introduced in 2021, that lets an eligible small company propose a debt restructuring plan to its creditors while the directors stay in control of the business - unlike voluntary administration, where an external administrator takes over. Eligibility is capped by total liabilities and there are conditions including being up to date with employee entitlements and lodgements. It is not a soft option and it is not right for everyone, but for a viable business with a bad balance sheet it is often a better outcome than liquidation for every party including the ATO.

Company debts are generally the company's, which is the point of the structure. The exposures that reach your personal assets are specific: director penalty notices for PAYG withholding, GST and super; personal guarantees you have signed, often to landlords, banks and suppliers; and loans you have drawn from the company. Those are knowable, and mapping them is usually the first thing worth doing, because directors routinely fear the wrong exposure while missing the real one. This is general information rather than advice about your situation.

No - this is the most costly and most common mistake. Lodging and paying are separate obligations. Not lodging does not delay the debt; it removes your options, converts future director penalty notices into lockdown notices, adds failure-to-lodge penalties, and marks you as not engaging at the exact moment engagement matters most. Lodge on time even when you cannot pay a cent, then deal with the payment separately.