ATO accused of freezing Plutus Payroll's bank account

The Australian Taxation Office has been named as the party at the centre of a commercial dispute with payroll provider Plutus Payroll, which last week suspended operations and sent IT contractor clients into a panic over unpaid wages.

Contractors were informed last Monday that Plutus was involved in a commercial dispute and it had immediately suspended operations, with payments from 27 April to 2 May affected. The nature of the dispute and the other entity involved was not disclosed.

In an email sent to contractors on Friday evening, Plutus named the ATO as responsible for freezing the company’s bank account and revealed it had filed legal proceedings against the agency in federal court.

“Our dispute is with the Australian Taxation Office who believe that Plutus owes the ATO money. Acting in a draconian and unfair manner, the ATO froze Plutus’ bank accounts on 27 April without prior warning or any consultation,” the email to contractors read.

“We have implored the ATO to allow us to release the funds so that we could pay you.

“For five days our lawyers have been vigorously protesting on your behalf. Despite our offer – and knowing that we only wanted to release enough of the money to pay your wages – the ATO has this evening refused our request. And exhausted our patience."

It said it had asked the court to intervene and order the ATO to unfreeze its accounts in order to pay its customers.

Plutus said the ATO's actions constituted an "extraordinary, aggressive exercise of their powers".

“Plutus unequivocally denies the ATO’s claim and will vigorously fight the matter through the objection process and the courts."