At the time when a person declares their bankruptcy, the whole of their indebtedness is "wiped out". What a relief!
It only lasts for three years, and the restrictions are few. Generally speaking, the impact is indiscernible. So, if you are served with a Bankruptcy Notice, take proper legal advice as it may be your best option. An ATO bankruptcy is no exception. Tax debts are no different to any other debt.
DEEDS OF COMPANY ARRANGEMENT & ARRANGEMENTS UNDER THE BANKRUPTCY ACT MAY BE EMPLOYED TO AVOID BANKRUPTCY AND IN THE CASE OF A COMPANY A WINDING UP
There are options available to individuals and corporations in difficult financial circumstances short of bankruptcy or liquidation.. It is open to an individual and a company to propose (in a formal way) an arrangement with their creditors by appointing a controlling trustee (in the case of an individual) or an administrator (in the case of a company). If accepted it enables the individual or the company to proceed under that arrangement. This can include payment by installments, coupled with a reduction in amounts owing.
Keep in mind that there are legitimate and legal mechanisms to avoid: