ATO statutory demand: what it means and what to do within 21 days

What is a statutory demand?

A creditor’s statutory demand is a formal legal document under the Corporations Act 2001. When the ATO issues one, it requires the company to deal with a specific debt within a fixed time. In the ATO’s own words, it “requires the company to pay the entire debt or enter into a payment plan with us within 21 days.”

It’s one of the most serious documents a company can receive, because of what happens if the 21 days pass without a response. Unlike a reminder letter, it isn’t the start of a conversation. It’s a step towards court.

Why does day 21 matter so much?

If a company fails to comply with a statutory demand within the time allowed, the law presumes the company is insolvent. A creditor — here, the ATO — can then rely on that presumption when it applies to court to have the company wound up. The company can still try to show it’s solvent, but the burden shifts and the process becomes harder, more expensive and more public.

Day	What it means
Day 1	Demand served — start acting today
Days 1–5	Get advice, confirm the amount, pull the ATO statement, start funding if needed
Days 5–15	Arrange payment or an agreed arrangement; complete loan documents
Day 21	Deadline — pay in full or have an arrangement in place
After day 21	Presumption of insolvency; wind-up application possible

The minimum debt for a statutory demand is $4,000, a threshold that has applied since 1 January 2021.

What are your realistic options?

1. Pay in full. The demand is satisfied. If the company has the cash, or can borrow it, this is the most certain outcome.
2. Enter a payment arrangement with the ATO. Contact the ATO immediately and discuss whether a plan it accepts can be put in place within the 21 days.
3. Challenge the demand. If the debt is genuinely disputed or the demand is defective, there are court processes with strict time limits. This needs a lawyer — immediately.
4. Formal insolvency. If the company genuinely can’t pay its debts, a registered liquidator can explain voluntary administration, small business restructuring or liquidation. Check registration on ASIC’s professional registers.

How can funding meet a 21-day deadline?

Property-secured funding is the most common way companies pay a statutory demand in full:

• Caveat loans are often the quickest to settle — see caveat loans for ATO debt.
• Second mortgages suit larger amounts or longer terms.
• Unsecured loans may work for smaller demands where bank statements are strong.

Funding is possible in as little as 24 hours for property-secured loans once everything is in place, but don’t plan on the last day. Valuations, title searches, identification and existing-lender consent all take time. Where arranged, the ATO is paid directly at settlement and you obtain written confirmation.

Is a statutory demand a sign the business is finished?

Not necessarily. Many viable companies receive statutory demands because a debt got away from them during a rough patch, or because letters went unopened. What matters is whether, once this demand is sorted, the company can keep paying its bills on time. If it can, resolving the demand — by payment or arrangement — lets it carry on. If it can’t, independent advice from a registered professional is essential. Our restructure or refinance guide helps you think it through.

Why should you be careful who you call now?

Statutory demands and the wind-up applications that can follow are a point at which some businesses start receiving unsolicited calls. The ATO’s red flags include advisers who contact you after a creditor has taken court action, and ASIC notes the pre-insolvency industry is unregulated. Before you share documents or pay a fee, check that the person is a registered liquidator, registered tax agent or lawyer — and read before you call anyone about tax debt.

What about directors?

If the company’s debt includes GST, PAYG withholding or super, there may also be a director penalty notice in play, with its own 21-day window. Paying the company liability in full deals with both. If you haven’t already, check whether any amounts are locked down — see director penalties.

What should you have ready when you call a funder?

To move quickly inside 21 days, have these ready for the first call: the statutory demand and the date it was served; the company’s ATO statement; property details (address, owner, current mortgage balance); recent business bank statements; ID for directors; and your accountant’s contact details. With those in hand, a property-secured application can move from enquiry to settlement within the window in many cases.

Keep the ATO informed

If you’re arranging funding to pay a statutory demand, let the ATO know what’s happening and when settlement is expected, in writing where possible. It doesn’t change the 21-day deadline, but it means the ATO knows payment is genuinely on its way — and it creates a record that you engaged promptly and in good faith.

Is the 21-day clock running for you?

If your company has received a statutory demand, start your enquiry today rather than later in the window. There’s no credit check to enquire, your details stay with one team instead of being shared with a list of lenders, and a real person will ask the date of service first. Give us the demand amount, the date and any property you could use — accurately — and we’ll tell you quickly whether funding can meet the deadline.