Can the ATO wind up my company?
Yes. If a company does not pay its tax debt and a suitable payment plan cannot be agreed, the ATO can serve a statutory demand. The company then has 21 days to pay the debt in full, agree a payment plan, or apply to court to set the demand aside. If it does none of these, it is presumed insolvent, and the ATO can apply to the Federal Court to wind it up and have an official liquidator appointed.
How the ATO gets to winding up
- Firmer action first. The ATO usually uses collection tools such as garnishee notices and director penalty notices before legal action.
- Statutory demand. A formal demand requiring the company to pay the whole debt, or enter a payment plan with the ATO, within 21 days.
- Presumption of insolvency. If the company does not comply, it is presumed insolvent.
- Winding-up application. The ATO applies to the Federal Court to wind the company up.
- Liquidation. If the court makes the order, an official liquidator takes control and sells the company’s assets to pay creditors.
Your options within the 21 days of a statutory demand
| Option | What it involves |
|---|---|
| Pay the debt in full | Ends the demand |
| Agree a payment plan with the ATO | The ATO’s guidance says the company must pay the entire debt or enter a payment plan within 21 days. See ATO payment plans |
| Apply to court to set the demand aside | Only where there is a genuine dispute about the debt, or another legal ground. The application must be filed and served within 21 days, with no extension |
| Appoint a small business restructuring practitioner or voluntary administrator | Formal options that can deal with all of the company’s debts. See small business restructuring and voluntary administration |
The 21 days are calendar days, so weekends and public holidays count. For more detail, see our statutory demand guide.
Behind with the ATO?
The earlier you act, the more options you have. Book a free 30-minute call with Luke D’Costa, Senior Manager – Debt Strategist. If you have received a director penalty notice, check your deadline with our 21-day DPN calculator.
Book a free 30-minute call Sydney 02 9660 3532 · Brisbane 07 3868 1888
Once a winding-up application has been filed
- The company generally cannot start a voluntary liquidation without the court’s leave.
- Dealing with the debt becomes more urgent, because the court can make the order at the hearing.
- Directors should get advice immediately on what options remain.
What it means for directors personally
- Director penalty notices. Unpaid PAYG withholding, GST and super can become a personal debt. See our DPN guide and liquidation and DPNs.
- Insolvent trading. A liquidator can pursue directors for debts incurred while the company was insolvent. See insolvent trading.
- Personal guarantees. Lenders and landlords may call on guarantees once the company fails.
Common questions
Can the ATO wind up my company?
Yes. If a company does not pay its tax debt and a suitable payment plan cannot be agreed, the ATO can serve a statutory demand and then apply to the Federal Court to wind the company up. If the court makes the order, an official liquidator is appointed.
How long do I have to respond to an ATO statutory demand?
21 days. Within that time the company must pay the whole debt, agree a payment plan with the ATO, or apply to court to set the demand aside. The court application has a strict 21-day limit.
What happens if the company ignores the statutory demand?
The company is presumed to be insolvent, and the ATO can rely on that when it applies to court to wind the company up.
Can we still choose our own liquidator once the ATO has applied to wind us up?
Generally not without the court’s permission. Once a winding-up application has been filed, the company usually cannot resolve to wind up voluntarily without the court’s leave.
Does the ATO’s winding-up action affect the directors personally?
It can. Director penalty notices, insolvent trading claims by the liquidator and personal guarantees are all separate personal risks for directors.
Sources: Australian Taxation Office, Legal action we may take (last updated 5 January 2026); Corporations Act 2001 (Cth) sections 459E, 459G, 459C and 490. This page is general information, not advice about your circumstances. Last reviewed: 9 October 2026.
Written by Luke D’Costa, Senior Manager – Debt Strategist. Luke has more than 16 years’ experience in insolvency and holds ARITA’s Advanced Certificate in Insolvency.
Reviewed by John Chand, Principal and Registered Liquidator. John has more than 17 years’ insolvency experience. Meet the team.
