The ATO has recently updated and reissued Practice Statement Law Administration PS LA 2011/13 Cross border recovery of taxation debts. This practice statement outlines the options available in relation to recovering a tax debt where the debtor is outside Australia, and sets out how the ATO deals with requests from other countries for assistance in recovering a tax debt owing to the other country.

It covers:

  • the ATO's ability to require payment under Australian tax legislation from debt-holders who are overseas (ie the ATO's garnishee powers);
  • trustees' and liquidators' ability to recover debts in a foreign jurisdiction, and how the ATO can assist;
  • the ATO's ability to obtain judgment in a foreign jurisdiction to recover debts in that jurisdiction;
  • the ATO's ability to request assistance from foreign jurisdictions.

The ATO may use an exchange of information (EOI) to assist domestic information-gathering and decide which recovery method to use. This can be used when:

  • the ATO has no visibility over a debtor's offshore affairs, and
  • the ATO has exhausted domestic options to source the information or verify the debtor's claims.

The ATO can request assistance from foreign jurisdictions in regard to debt recovery through:

  • bilateral treaties with individual jurisdictions that allow for assistance with collection; and
  • the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI BEPS), to which multiple jurisdictions are signatories.

The practice statement was originally issued on 14 April 2011, and the updated version is effective from 15 August 2019.