If you’re facing bankruptcy, you might be wondering what happens to your tax refunds. In order to help, we’ve put together some general guidelines on how the Australian Taxation Office (ATO) deals with this during bankruptcy.

The ATO can keep tax refunds to cover any unpaid tax debt if:

• You are an undischarged bankrupt; and
• You owe money to the ATO prior to bankruptcy and/or during bankruptcy.

If you receive any tax refund while you’re an undischarged bankrupt you need to notify and declare this refund to your bankruptcy trustee. Your bankruptcy trustee will make an assessment if the refund must be paid into your bankrupt estate or whether you can keep it.

Typically, if the ATO doesn’t keep the refund and the refund relates to a pre-bankruptcy period, then the full amount must be paid to your bankruptcy trustee.

After you are discharged from bankruptcy, the ATO cannot keep any refund and it must be paid to you.

If you are looking for a trusted and reliable registered Bankruptcy Trustee, then get into contact with Australian Bankruptcy Services. We are all fully licensed and qualified to help you file for Bankruptcy and oversee the process. Call us on our toll-free hotline – 1800 462 767. We operate 24 hours a day, 7 days a week, so there will always be someone on the other side ready to speak to you.