Picture this.
You’ve done the impossible. You’ve wrangled the team, wrangled the clients, and you’re at the airport with boarding pass in hand, pockets full of optimism, and a dangerously relaxed jaw.
Then the universe taps you on the shoulder and says: “Actually mate, the ATO would like a quick word.”
Because yes, the ATO can stop you leaving Australia if you’ve got a serious tax debt and you’ve been avoiding dealing with it. It’s called a Departure Prohibition Order (DPO). 🤯
Let’s break down what’s going on, who it affects, and how to avoid becoming the person explaining to Border Force that you’re a “good bloke” and you “meant to get to it”.
A DPO is an enforcement action that prevents someone from departing Australia if they have a tax liability and the ATO believes they might try to leave without paying or making suitable arrangements.
It’s not the first step. It’s not even the second or third. It’s the ATO’s way of saying:
“We’ve tried polite. We’ve tried patient. Now we’re trying… airport.”
This isn’t aimed at the average business owner who’s had a rough year and is trying to sort it out.
It’s aimed at people with significant debts, who have the means to pay, and who take deliberate steps to avoid paying.
But here’s the catch. Even if you’re not “deliberately avoiding”, there are a few common situations that can drag you closer to the danger zone than you’d expect.
1) Businesses using “tax money” as an overdraft
This is the classic slow slide.
GST comes in, PAYG withholding gets deducted from staff wages, super is due, and cash is tight. So the money that should be paid to the ATO becomes the world’s least fun working capital facility.
The ATO really doesn’t love this. They’re warning small businesses to stay on top of debt and lodgements to avoid firmer action.
2) Company directors who think “that’s the company’s problem”
Sometimes directors think: “The company owes it, not me.”
The ATO’s view is more: “Interesting theory. Let’s discuss director penalty rules.”
Directors can become personally exposed for certain unpaid business tax liabilities depending on the circumstances and timing, which is why ATO debt problems can stop being “business admin” and become “personal stress hobby”.
3) People who go quiet when the ATO calls
This is the big one.
The ATO tends to escalate when there’s a pattern of:
The ATO can handle “we can’t pay right now”. What they struggle with is “we’ve decided communication is optional”.
Most people won’t get a DPO. But the broader message is still important because the ATO is using sharper tools across the board.
Two big ones to understand:
👉 Garnishee notices
A garnishee notice lets the ATO tell a third party to pay them instead of you. That third party can be your bank, a customer, or someone else holding money on your behalf.
This is where cash flow goes from “a bit tight” to “why is everyone calling me at once”.
👉 Director penalty enforcement
If you’re a director and the company has unpaid obligations, the ATO can take steps to recover amounts in ways that get very real, very quickly.
Here’s the boring but effective playbook.
1) Lodge everything first
Even if you can’t pay.
Unlodged returns make you look like a risk. Lodged returns make you look like a business that’s trying. Big difference.
2) Engage early with a realistic plan
The ATO is more willing to work with you when you’re proactive and credible. Silence is not a strategy, even if it feels peaceful in the moment.
3) Stop using GST and PAYG as cash flow glue
If the business only works when you keep the ATO’s money, you don’t have a “tax issue”. You’ve got a margin and cash flow issue.
Fixing that is what stops the debt coming back.
4) Put in place simple guardrails
A few options that actually work in real businesses:
The ATO’s tone right now is clear: they want people to engage early, lodge on time, and stop treating tax as an interest-free loan.
You don’t need to be perfect. You just need to be in the game.
If you’re behind, get your lodgements current, get a plan in place, and fix the cash flow leak that caused it.
If you want a hand, that’s literally what we do. Reach out to the team.
– The team at PAL (making accounting slightly less boring since way back when)
Disclaimer: This article is here to give you general info only, not professional advice specific to your unique situation. While efforts are made to ensure accuracy, the content may change over time. We can’t take responsibility for any decisions based on the contents of this article, so be sure to chat with your accountant or advisor first!
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