ATO indemnities to insolvency practitioners***

“New requirements for indemnity offers from the ATO to insolvency practitioners***

All indemnity offers from the ATO to insolvency practitioners must comply with a minimum standard in order to be considered. This is due to legal and policy obligations imposed on insolvency practitioners in relation to the proper conduct of the administration for all creditors.

This standard consists of the following requirements.

The request must fully address part 1 of the Indemnity checklist for the ATO, as well as part 2 if an indemnity is being sought to fund a litigation action. It must also be accompanied by the Annexure A document, clearly setting out the costs and particulars for each task to be undertaken that will be funded. See Checklist to assist ATO.

All requests must be in writing and sent to the appointee in triplicate and be made for the sole purpose of providing an indemnity, rather than included as one of numerous items contained in lengthy requests to the practitioner.

The first page of the indemnity offer must be clearly marked as ‘Indemnity offer’ to ensure requests are handled promptly.

Except in exceptional circumstances, all indemnity offers must be made before an action is commenced and before the insolvency practitioner commits to the use of particular solicitors, legal counsel or other experts. The practitioner will also need to assess the risks, merits and prospects of success and recovery of a proposed action before making a decision to accept ATO funding.

Indemnity offers which do not comply with the above minimum standards will usually not be treated as a genuine offer and may not receive a response. Where it is clear the ATO made some attempt to comply with these standards but not all aspects were properly addressed, the practitioner may consider the request and seek further information if necessary.

Offers from the ATO must be made promptly and will be decided upon by the practitioner in due course.

Next steps:

  • Checklist to assist ATO – instructions and links to the indemnity checklist (part A and part B) and Annexure A
  • Refer to the current law, including Murrays Legal, prior to preparing and submitting each indemnity offer as it can change.
  • If you have any general questions about indemnity requests, you can direct your enquiries to the practitioner”.

*** Fake news, but some might get the point; see ATO.

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