ATO Powers: Departure Prohibition Orders
Part IVA of the Tax Administration Act 1953 (Cth) gives the Commissioner the power to issue a departure prohibition order (“DPO”) which prohibits a tax debtor from leaving Australia, regardless of whether the tax debtor intends to return. The purpose is to stop tax debtors from departing from Australia until such time as their tax liability is paid in full or suitable arrangements for payment are made.
A DPO is a very powerful tool as it severely restricts a taxpayer’s liberty and freedom of movement. This issue made global headlines in 2010 when actor/comedian Paul Hogan was served with a DPO for a tax debt going back as far as 1987.
The Commissioner’s ability to exercise this discretionary power depends upon the existence of certain preconditions. These are:
1. the tax debtor must have a tax liability, and
2. the Commissioner must believe, on reasonable grounds, that it is desirable to issue a DPO for the purpose of ensuring that the tax debtor does not depart from Australia without:
- wholly discharging the tax liability, or
- making arrangements satisfactory to the Commissioner for the tax liability to be wholly discharged.
A DPO has no fixed term so it remains in force until and unless it is revoked by the Commissioner or is set aside by a Court. The Commissioner will revoke a DPO only if the tax liabilities are wholly discharged or deemed to be irrecoverable. Although difficult to obtain, a taxpayer can still leave Australia under an active DPO if they receive a Departure Authorisation Certificate.
Australian taxpayers, whether living in Australia or abroad, should be wary of the ATO’s significant debt collection powers.
If you have been served with a DPO or are seeking to travel to or from Australia but are concerned you could be subject to a DPO, please contact our team of tax solicitors at The Quinn Group on (02) 9223 9166 or submit an online enquiry form today.