A statutory demand is urgent. Do not face it without legal advice.

Get the demand reviewed immediately

A statutory demand can be a step towards an application to wind up a company. There are strict deadlines and rules about responding or applying to set aside a demand. Obtain legal advice immediately, even if you are considering finance.

The usual compliance period is 21 days after service. Your lawyer should confirm the service date and the applicable legal position. Negotiating or applying for a loan does not automatically extend that deadline.

Affordability and company solvency both matter

Borrowing to settle a demand may be possible in some circumstances. It is not necessarily appropriate if the company cannot pay its debts as they fall due. Directors should obtain advice on solvency and their duties.

We can discuss a potential funding pathway while your legal and accounting advisers handle the demand. There is no promise that funding will be available or completed in time.

What an ATO statutory demand means, and why the clock matters

A statutory demand is a formal demand for payment that can be a step towards a wind-up application if left unanswered. It is governed by strict rules, and the standard compliance period is 21 days after service — a deadline that does not pause for weekends, holidays or a pending loan decision.

This is one of the most serious documents an ATO debt can generate, because an unanswered demand can create a presumption of insolvency. Confirming the exact service date with a lawyer is the first and most urgent task.

It is also worth understanding that a statutory demand is a court-related process, distinct from everyday ATO collection letters, which is exactly why it warrants legal advice rather than a purely financial response.

Even where a director believes the underlying debt is disputed, that belief alone does not pause the deadline; only the correct legal process, confirmed by a lawyer, can do that.

Get legal advice before anything else

A qualified lawyer should review the demand immediately to confirm the service date, whether grounds exist to apply to set it aside, and what the 21-day period means for your company. This advice needs to happen in parallel with, not after, any exploration of finance.

Directors should also consider solvency carefully. If the company cannot pay its debts as they fall due, an insolvency practitioner may need to be involved alongside your lawyer and accountant.

Keep a precise record of the date the demand was received and by whom, since even small discrepancies in the service date can affect the legal deadline your lawyer calculates.

Where finance may fit

If your lawyer confirms that paying the debt is an appropriate way to resolve the demand, and the company is otherwise solvent, finance may be explored as a possible way to fund that payment. There is no guarantee a loan can be approved and settled within the demand’s timeframe, so legal strategy should not depend on it.

If solvency is genuinely in question, borrowing to meet the demand may not be appropriate, and a conversation with an insolvency practitioner should take priority.

It is also worth asking your lawyer whether a negotiated payment arrangement with the ATO could be agreed in place of, or alongside, repaying the full amount, since this may ease pressure on the compliance timeframe.

What lenders will need, prepared in advance

Because time is short, having documents ready before you speak with a lender can make a real difference.

The more complete this file is when you first speak with a lender, the more realistic the conversation about timing and feasibility can be.

• A copy of the statutory demand and the confirmed service date
• Legal advice on the applicable deadline and any set-aside options
• ATO statement showing the underlying debt
• Recent financial statements demonstrating solvency
• Your accountant’s and lawyer’s contact details, where appropriate

A hypothetical example

Hypothetical only: a company is served with a statutory demand for a $55,000 ATO debt. Its lawyer confirms the service date and that no grounds exist to set the demand aside, and its accountant confirms the company can otherwise meet its debts as they fall due. With that advice in place, the director asks whether a loan to pay the $55,000 within the remaining window is realistic. All figures and timing here are illustrative only and not a prediction of any real outcome.

How our tax debt finance team works with you

Our tax debt finance team is led by Kevin Knight, Principal Finance Broker and MFAA Accredited Finance Broker with 20+ years in Australian banking. We can assess the finance side of a statutory demand scenario promptly, working alongside — never ahead of — your lawyer’s advice on the demand itself.

Common mistakes to avoid

The biggest risk is treating a finance application as a reason to delay legal advice — by the time funding is arranged, the 21-day period may already have expired. Directors sometimes also assume negotiating directly with the ATO automatically extends the deadline, which it does not without a formal legal step. Ignoring solvency concerns in the rush to “just pay it” can also create bigger problems than the demand itself.

Questions owners ask

• How long do I have to respond to a statutory demand? — Generally 21 days after service, but your lawyer must confirm the exact date and any options available.
• Can I apply to set the demand aside? — In some circumstances, yes; this is a legal question that needs prompt advice from a qualified lawyer.
• Does applying for a loan pause the 21-day period? — No, the deadline runs regardless of any finance application in progress.
• What if the company might be insolvent? — Speak with an insolvency practitioner before pursuing finance, as borrowing may not be appropriate in that situation.

Keep exploring

Related services and further reading for directors facing a demand.