It is important for directors and their professional advisers to remember that if, at any time whilst a company is insolvent, the company pays any withholding taxes to the ATO e.g. BAS, PAYG and the company is subsequently placed into liquidation, then by reason of the operation of section 588FGA of the Corporations Act 2001 (Cth.) (the Act), if the liquidator claws back any payments from the ATO as preference payments, then the directors are liable to compensate the ATO for the amount of the preference.

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