An introduction to 'Departure Prohibition Orders'

The Australian Taxation Office (ATO) has ramped up its use of Departure Prohibition Orders (DPO’s) in the current financial year. For individuals with outstanding tax debts, this is no longer a theoretical risk, but a very real barrier to international travel.

DPO’s are being deployed alongside other enforcement tools, including Director Penalty Notices and winding-up applications, as part of the ATO’s broader strategy to cut accumulating tax debt and improve compliance.

What is a Departure Prohibition Order?

A Departure Prohibition Order is a statutory power that allows the Commissioner of Taxation to prevent a person from leaving Australia where they have unpaid tax liabilities.

Under s145 of the Taxation Administration Act 1953 (Cth) (TAA),^[1] the Commissioner may issue a DPO where there are reasonable grounds to believe that a person should not depart Australia unless they have:

• wholly discharged their tax liability; or
• made arrangements satisfactory to the Commissioner for that liability to be wholly discharged.

Once a DPO is in force, s14R makes it unlawful for a person who is aware of the order to depart Australia.^[2]

As the ATO’s Assistant Commissioner Anita Challen has stated, “the consequences of being issued a DPO are serious and confronting”.

DPO’s can be issued against Australian citizens and foreign nationals alike, provided the tax debt relates to Australian liabilities.

When will the ATO issue a DPO?

The Commissioner considers a range of factors on a case-by-case basis, including:

• the size of the oustanding tax debt;
• whether the individual holds assets that could be readily realised; and
• the individual's travel history, including frequent overseas travel for work or business.

Importantly, while personal or humanitarian circumstances may be raised, the Commissioner is not required to give them decisive weight.

Can a DPO be revoked or varied?

Yes, but only in limited circumstances.

Under s14T of the TAA, a DPO may be revoked where:

• the tax debt has been wholly discharged and the Commissioner reasonably believes future liabilities will also be paid; or
• the Commissioner is satisfied that the tax liability is completely irrecoverable.

In some cases, the ATO may accept alternative arrangements, such as a structured payment plan. However, this is not automatic. An affected individual must make a formal application and demonstrate that revocation or variation is justified on the avalilable facts.

Departure Authorisation Certificates (DACs)

A person subject to a DPO may apply for a Departure Authorisation Certificate, which permits overseas travel for a specified period.

A DAC will only be granted where the Commissioner is satisfied that the individual will return to Australia within the timeframe considered appropriate in the circumstances. Again, this is a discretionary decision and depends on the individual’s compliance history and overall risk profile.

What happens if a DPO is breached?

Where an individual winds up with a DPO against them, and that individual knowingly still decides to depart Australia, without a DAC being granted, there are satisfactory grounds to impose a penalty on that individual. In that, the penalty is up to 50 penalty units or 12 months imprisonment, or those in conjunction.

What does this mean in practice?

The increasing use of DPOs isa clear signal that the ATO is prepared to take decisive action against taxpayers who fall behind and fail to engage.

For individuals, particularly directors, business owners and high-net-worth taxpayers leaving tax liabilities unresolved while prioritising overseas travel can have serious and immediate consequences.

As Assistant Commissioner Anita Challen has emphasised, “putting your head in the sand is not an option.” Early engagement with the ATO or your tax adviser can often prevent matters from escalating to this stage.

If you are facing ATO enforcement action or have concerns about outstanding tax liabilities and overseas travel, our team can assist. Please contact our disputes team here or Aaron McDonald on +61 (8) 6188 3340 or aaron@pragma.law.

_{[1] Taxation Administration Act 1953 (Cth) s 145.}

_{[2] Ibid s 14R.}