Tech contractors haven't been paid because the ATO froze Plutus Payroll's bank accounts

Photo by Christopher Polk/NBC/NBC via Getty Images

Plutus Payroll, which left thousands of tech contractors unpaid after it stopped operating last week, has revealed the Australian Taxation Office has frozen its bank accounts.

Plutus Payroll on Monday night stripped its website of content and posted a single message saying its operations had been halted “due to a commercial dispute”. Out of its total base of 4,000 contractors, up to 2,000 are reportedly owed money.

The company at the time refused to divulge the nature of the dispute, leading to speculation about it going into administration or receivership. On Friday evening, Plutus finally came clean, via emails to contractors and a message on its website, that its battle was with the ATO.

“Acting in a draconian and unfair manner, the ATO froze Plutus’ bank accounts on 27 April without prior warning or any consultation,” the company stated.

“We received no notice of intention to audit, no complaint and no other advance warning of non-compliance from the ATO. When the ATO acted, without notice, they froze our bank accounts — and we became unable to pay our contractors the money owed to them.”

The money owed to contractors was still in the frozen bank account, according to the company, while negotiations took place with the tax office to release the funds. But the situation came to a head on Friday afternoon.

“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,” announced Plutus.

“This afternoon, with no positive outcome, we have instructed our lawyers to urgently file proceedings in the Federal Court and attend before a judge of that court on Monday.”

The Australian Taxation Office declined to comment to Business Insider, citing confidentiality on individual cases.

Plutus Payroll stated that last week it had “the option” to place itself into administration or receivership but chose to “do the right thing by our contractors” in fighting the tax office to have the funds released.

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

With the case escalating into legal action, the missing pay for tech contractors remains undelivered, but the company still stood by its commitment that the money will arrive upon the resolution of the dispute.

Plutus Payroll has maintained that only payments due on April 27 to May 2 inclusive had been withheld. However, some contractors, through direct contact with Business Insider and on internet forums, have said they’re owed money going back a fortnight, a month or even two months.

In response, a Plutus spokesperson told Business Insider last week that those people may be “citing legitimate and normal course of business issues with pay” but was definitely not affected by the current commercial dispute.

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