In this world nothing is certain but death and taxes

As Benjamin Franklin said ‘in this world nothing is certain but death and taxes’ and the taxman always collects.

It should never be an option for a taxpayer to leave Australia without wholly discharging their tax liability or making satisfactory arrangements to discharge their tax liability. However should a taxpayer choose this option they should be aware that the Commissioner of Taxation (‘the Commissioner’) has the power to issue a departure prohibition order (‘DPO’).

A DPO prevents the taxpayer from leaving Australia for a foreign country until such time as the tax liability is paid in full or suitable arrangements for the payment of the tax liability are made.

The Australian Federal Court recently upheld the Commissioner’s decision not to revoke a DPO (see Troughton v DCT (2008) FCA18). In this case the taxpayer was a UK citizen who had worked in New Zealand (‘NZ’) and Australia between 1988 and 2002. In May 2007, while the taxpayer was in Australia, the Commissioner issued assessments for over AUD 5.6 million in tax nearly all of which remains outstanding. The Commissioner issued a DPO preventing the taxpayer from leaving Australia. The Australian Federal Court held that the Commissioner’s belief that the taxpayer had interests in family trusts with assets in NZ and in funds held on trust in a Swiss bank account justified the decision not to revoke the DPO.

This case demonstrates the Commissioner’s attitude to taxpayers who fail to discharge their tax liability or who fail to make satisfactory arrangements to discharge their tax liability. Taxpayers should be aware that engaging in such activity could result in a loss of their freedom of movement.

This information has been prepared in good faith, is in the nature of general comment only, and neither purports, nor is intended, to be advice on any particular matter.  You should not act or rely upon any matter or information contained in or implied without taking appropriate professional advice which relates specifically to your particular circumstances.  The authors and consultants expressly disclaim all and any liability to any person (whether a reader or not) who acts or fails to act as a consequence of reliance upon the whole or any part of this information.