Small Business Restructuring
ATO Statutory Demand — 21 Days to Act
An ATO statutory demand is one of the most urgent legal documents a company director can receive. If you do not respond within 21 days, the ATO can use it as conclusive proof of insolvency and apply to wind up your company. Get legal advice today.
⚠ The 21-day response window for a statutory demand is fixed — missing it can result in your company being wound up — submit your request now.
Does This Sound Like You?
Common situations we help with.
Received an ATO statutory demand for unpaid tax
The ATO has served your company with a statutory demand under section 459E of the Corporations Act 2001 demanding payment of outstanding income tax, GST, or other tax debts. The clock is running. You need to understand whether you can pay the debt, dispute it, or apply to a court to set aside the demand within 21 days of service.
21-day deadline is approaching fast
You received the demand days ago and have not yet acted. The 21-day period to apply to set aside the demand or comply runs from the date of service, not the date you opened the envelope. An application to set aside must be filed in court before the 21 days expire — there is no extension available after the fact.
You want to apply to set aside the demand
You believe the ATO's demand is based on a debt that is genuinely disputed, incorrectly calculated, or subject to an offsetting claim your company has against the ATO. An application to set aside must be made to the Federal Court or Supreme Court before the 21-day deadline and must be supported by affidavit evidence establishing the grounds.
Company is trading but cash flow is the issue
Your business is viable and trading profitably, but a cash flow gap means you cannot pay the tax debt right now. In this situation, a payment arrangement with the ATO — negotiated urgently — may allow the demand to be withdrawn before a winding up application is filed. A lawyer can negotiate on your behalf and document any arrangement reached.
ATO using the statutory demand as a first step toward winding up
You are aware that if you do not comply with or set aside the demand within 21 days, the ATO can rely on the presumption of insolvency to file a winding up application in the Federal Court. Understanding this process and acting before the application is filed significantly improves your options and reduces costs.
Unsure if the debt amount claimed is correct
The statutory demand specifies a debt amount that does not match your records, includes amounts you believe have already been paid, or includes penalties or interest that should not have accrued. Discrepancies in the demand amount may provide grounds to set aside or reduce the demand, and a lawyer can help you identify and document those grounds quickly.
How It Works
Urgent help with your ATO statutory demand
When the ATO issues a statutory demand, time is critical. Submit your request now and we will connect you with an insolvency and tax law specialist who can advise on your options and act within your 21-day window.
Submit Your Statutory Demand RequestSubmit your request
Tell us when the demand was served, the amount claimed, and whether you dispute the debt or simply cannot pay right now.
Get matched with an insolvency specialist
We connect you with a lawyer experienced in statutory demand proceedings, ATO negotiations, and corporate insolvency law under the Corporations Act 2001.
Act before the deadline
Your lawyer will advise on the best response — pay, negotiate a payment arrangement, file a set-aside application, or enter voluntary administration — and act immediately.
21 Days
The fixed statutory window to respond to a statutory demand — after which winding up proceedings can commence
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Requests matched to specialist lawyers across every state and territory in Australia
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Initial consultation — understand your rights and options before committing to any action
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Urgent consultations available — we understand that statutory demand timelines leave no room for delay
Before You Miss the Deadline
Practical questions about ATO statutory demands.
What is a statutory demand and what triggers the ATO to issue one? +
A statutory demand is a formal written demand served on a company under section 459E of the Corporations Act 2001, requiring payment of a debt of at least $4,000 (as at 2024) within 21 days. The ATO typically issues a statutory demand after standard debt collection methods have failed — including account statements, letters, and phone calls — and where the company has not entered into a payment arrangement. The demand creates a presumption of insolvency that can be used in winding up proceedings if not responded to within 21 days.
What is the 21-day response window and how is it calculated? +
The 21-day period runs from the date the demand is served on the company, not the date it is received or opened. Service is typically by post to the company's registered address, and the date of service is governed by the Corporations Act rules — generally the fourth business day after posting. If you do not comply with the demand or file a court application to set it aside within 21 days of service, the company is presumed insolvent for the purposes of a winding up application. There is no mechanism to extend this deadline after it has expired.
What are the grounds to set aside a statutory demand? +
Under section 459H of the Corporations Act, a court may set aside a statutory demand where the company can establish a genuine dispute about the existence or amount of the debt, or where the company has an offsetting claim against the creditor. A court may also set aside a demand under section 459J where there is a defect in the demand that causes substantial injustice, or where some other reason exists to do so. The bar for establishing a genuine dispute is relatively low — the company need only show a plausible contention requiring investigation, not that the dispute will ultimately succeed.
What are the consequences of not responding to a statutory demand? +
If the company fails to comply with the statutory demand or apply to set it aside within 21 days, the company is presumed insolvent under section 459C of the Corporations Act. The ATO can then file a winding up application in the Federal Court, relying on that presumption of insolvency without having to separately establish that the company cannot pay its debts. Once a winding up application is filed, the costs of defending it escalate significantly and the options available to the company narrow considerably.
Should I try to set aside the demand or just pay the debt? +
The right response depends on whether you genuinely dispute the debt and whether you have the funds to pay it. If you can pay, payment is the simplest resolution and eliminates the risk of winding up proceedings. If you cannot pay but the business is viable, a payment arrangement with the ATO should be negotiated urgently and may result in the demand being withdrawn. A set-aside application is appropriate where you genuinely dispute the debt or the demand is defective. Seeking legal advice immediately is the best approach — a lawyer can assess the situation and recommend the right strategy for your specific circumstances.
When does the ATO issue a statutory demand rather than using other debt recovery methods? +
The ATO generally issues statutory demands where a company has significant unresolved tax debt, has failed to engage with earlier collection attempts, or has breached a payment arrangement. The ATO also uses statutory demands against companies suspected of phoenixing — deliberately transferring assets to avoid tax debt. The ATO has published guidance on its collection policies, and a lawyer can sometimes negotiate withdrawal of a demand in exchange for a compliant payment arrangement before it escalates to a winding up application.
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