How to Issue a Statutory Demand in Queensland: A Step-by-Step Guide

A statutory demand under section 459E of the Corporations Act 2001 (Cth) is a formal written notice requiring a company to pay a debt of at least $4,000 within 21 days. Failure to comply creates a legal presumption of insolvency, entitling the creditor to apply to wind up the company.

What Is a Statutory Demand?

A statutory demand is a formal written notice served on a company by a creditor, requiring the company to pay a debt within 21 days. It is governed by section 459E of the Corporations Act 2001 (Cth).

If the company fails to comply with the demand (and does not successfully apply to set it aside), a presumption of insolvency arises under section 459C(2)(a). This presumption can then be used to support an application to wind up the company in insolvency.

This makes the statutory demand far more than a simple demand for payment — it is a gateway to winding up proceedings.

Statutory Demand Lawyers Queensland: Your Step-by-Step Guide to Issuing a Statutory Demand

A statutory demand is one of the most powerful debt recovery tools available to creditors in Australia. If a company owes you money and has failed to pay, issuing a statutory demand under section 459E of the Corporations Act 2001 (Cth) can force the issue — quickly and decisively.

As experienced statutory demand lawyers in Queensland, Boss Lawyers regularly assists creditors in drafting, serving, and enforcing statutory demands. This guide explains exactly how the process works.

When Can You Issue a Statutory Demand?

You can issue a statutory demand when:

• The debtor is a company (not an individual — for individuals, the equivalent is a bankruptcy notice)
• The debt is due and payable
• The debt is at least $4,000 (the current statutory minimum under regulation 5.4.01 of the Corporations Regulations 2001)
• The debt is not genuinely disputed

Critical warning: Do not use a statutory demand to pursue a debt that is genuinely disputed. If the company applies to set aside the demand on the basis of a genuine dispute and succeeds, you may be ordered to pay the company’s legal costs.

Step-by-Step: How to Issue a Statutory Demand

Step 1: Confirm the Debt

Before preparing the demand, verify that:

• The debt is due and payable (all contractual preconditions have been met)
• The amount exceeds $4,000
• There is no genuine dispute about the existence or amount of the debt
• The debtor entity is a registered company (check the ASIC register)

Step 2: Prepare the Statutory Demand

The demand must be in the prescribed form (Form 509H) and must:

• Specify the debt and the amount owed
• Require the company to pay the debt or secure or compound the debt to the creditor’s reasonable satisfaction within 21 days
• Be accompanied by an affidavit verifying the debt (unless the debt arises from a judgment or order of a court)

The affidavit must be sworn or affirmed by a person with direct knowledge of the debt — not simply a solicitor acting on instructions. The affidavit must verify that the debt is due and payable and that the deponent believes there is no genuine dispute about the debt.

Step 3: Serve the Demand

The statutory demand must be served on the company at its registered office. Service can be effected by:

• Leaving it at the company’s registered office
• Posting it to the company’s registered office

The registered office address can be found on the ASIC company register. It is critical to serve at the correct address — service at a trading address (rather than the registered office) may be challenged.

Step 4: Wait 21 Days

Once served, the company has 21 days to:

• Pay the debt in full
• Secure or compound the debt to your reasonable satisfaction (for example, by entering into a payment arrangement)
• Apply to court to set aside the demand under section 459G — the application must be filed and served within the 21-day period (there is no extension of time available)

Step 5: Apply to Wind Up the Company (If Unpaid)

If the company fails to comply with the demand and does not successfully apply to set it aside, you may file an application to wind up the company in insolvency with the Federal Court of Australia or the Supreme Court of Queensland. The presumption of insolvency arising from non-compliance with the statutory demand shifts the burden to the company to prove it is solvent.

Common Mistakes When Issuing Statutory Demands

Statutory demands are technical documents, and errors can be fatal. Common mistakes include:

• Overstating the debt — claiming more than is owed can provide grounds to set aside the demand
• Defective affidavit — an affidavit that does not properly verify the debt, or is sworn by the wrong person, can undermine the demand
• Wrong entity — serving the demand on the wrong company (particularly in corporate groups) is a fatal error
• Disputed debt — issuing a demand for a genuinely disputed debt invites a set-aside application
• Wrong address — serving at a trading address rather than the registered office

Why Use a Statutory Demand Instead of Standard Court Proceedings?

A statutory demand offers several advantages over commencing a standard debt recovery claim:

• Speed — the 21-day response period is much shorter than a standard litigation timeline
• Cost — the initial cost of preparing and serving a statutory demand is significantly less than commencing court proceedings
• Leverage — the threat of winding up is a serious consequence that motivates payment
• Presumption of insolvency — non-compliance creates an evidentiary advantage in subsequent winding up proceedings

How to Respond to a Statutory Demand: What Queensland Companies Must Do in 21 Days

If your company has received a statutory demand, the 21-day clock starts from the date of service. Missing the deadline means a presumption of insolvency under section 459C(2)(a) of the Corporations Act 2001, which can be used to wind up your company.

A company that receives a statutory demand has three options:

• Pay the debt in full within 21 days
• Negotiate a settlement or payment arrangement that satisfies the creditor
• Apply to court under section 459G to set aside the demand — but the application must be filed and served within the 21-day period with no extension available

The s 459G deadline is absolute. In David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265, the High Court confirmed that there is no jurisdiction to extend the 21-day period. Once the deadline passes without compliance or a court application, the presumption of insolvency is triggered.

Grounds to Set Aside a Statutory Demand

Under section 459H, a court may set aside a statutory demand if the company establishes:

• There is a genuine dispute about the existence or amount of the debt (s 459H(1)(a))
• The company has an offsetting claim that reduces the demand below the $4,000 threshold (s 459H(1)(b))
• There is a defect in the demand and substantial injustice would result if it were not set aside (s 459J(1)(a))
• There is some other reason why the demand should be set aside (s 459J(1)(b))

When the ATO Issues a Statutory Demand: The DPN Intersection

Most statutory demands are issued by commercial creditors. Suppliers, financiers, and former business partners all use the statutory demand process to pursue unpaid invoices. However, the Australian Taxation Office (ATO) is now one of the most active issuers of statutory demands in Australia, and when the ATO is the creditor, the stakes for company directors are substantially higher than in an ordinary creditor scenario.

The ATO’s Power to Issue a Statutory Demand

The ATO may issue a statutory demand under section 459E of the Corporations Act 2001 (Cth) for any tax debt that is due and payable by a company, including unpaid PAYG withholding, GST, superannuation guarantee charge (SGC), income tax assessments, and penalties. The demand carries the same legal effect as any other statutory demand: if the company does not pay, compound, or successfully challenge the demand within 21 days of service, a presumption of insolvency arises under section 459C(2)(a). That presumption entitles the ATO to apply for the company’s winding up.

In practice, the ATO typically issues statutory demands where the total tax debt exceeds its internal cost-benefit threshold and other enforcement options (payment plans, garnishee notices) have been exhausted or are unlikely to recover the debt. In 2026, with the ATO publicly committed to reducing Australia’s collective tax debt book, statutory demands against Queensland companies have increased markedly.

The DPN Clock Runs in Parallel

Here is the critical difference that directors often miss. When the ATO serves a statutory demand on the company, it may simultaneously issue, or have already issued, a Director Penalty Notice (DPN) to each director personally. A DPN is issued under Division 269 of Schedule 1 to the Taxation Administration Act 1953 (Cth) and makes directors personally liable for the same PAYG withholding, SGC, and GST amounts that the statutory demand pursues from the company.

This means two separate 21-day deadlines may be running at the same time:

• The statutory demand clock (s 459E, Corporations Act): the company has 21 days to pay, compound, or apply to court to set aside the demand
• The DPN clock (Div 269, TAA 1953 Sch 1): the director has 21 days from receipt of the DPN to pay the debt, appoint a voluntary administrator, or appoint a liquidator to avoid personal liability crystallising

Paying the statutory demand at the company level will discharge the company’s obligation and extinguish the DPN exposure for the same amount. But if the company cannot pay, or if the DPN is a lockdown DPN (issued because the company failed to lodge its tax returns on time), the director’s personal liability may already be fixed regardless of what happens to the company.

The Payday Super Dimension from 1 July 2026

From 1 July 2026, the Payday Super regime requires employers to pay superannuation contributions to employees’ funds with every pay cycle rather than quarterly. For most payroll systems, this creates up to 52 SGC compliance windows per year instead of four. Each missed payment window is a potential DPN exposure point. For companies already receiving an ATO statutory demand for historic SGC debt, the Payday Super regime adds ongoing compliance obligations that must be met even while the company addresses the existing demand. Directors cannot treat payment of the statutory demand as a clean slate if fresh SGC obligations are accruing weekly under the new regime.

What Directors Must Do Differently

When an ATO statutory demand arrives, directors must treat it as a personal alert, not just a corporate compliance issue. The practical steps differ from a commercial creditor scenario:

• Check for a concurrent DPN: confirm whether a DPN has been issued, and if so, whether it is a non-lockdown or lockdown DPN
• Do not assume payment extinguishes DPN exposure: if a lockdown DPN has already issued, personal liability is crystallised and payment plans do not reverse it
• Act within both 21-day windows: the statutory demand deadline and the DPN deadline are independent, and missing either has serious consequences
• Consider voluntary administration: appointing an administrator within the DPN window can protect against non-lockdown DPN personal liability, even if the company ultimately does not survive
• Get legal advice immediately: the intersection of the statutory demand regime and the DPN regime is complex, and advice from an insolvency lawyer on day one is essential

Directors who focus only on the company-level statutory demand and overlook their concurrent DPN exposure risk the worst outcome: the company is wound up and they remain personally liable for the same tax debt.

Statutory Demand Lawyers Queensland: 2026 Update

Several developments in 2026 affect how statutory demands are used and defended in Queensland:

• ATO enforcement escalation: The Australian Taxation Office has resumed aggressive use of statutory demands against companies with outstanding PAYG withholding, GST, and superannuation guarantee charge debts. The Payday Super regime (commencing 1 July 2026) has created 52 annual SG deadlines instead of quarterly, increasing the risk of inadvertent shortfalls that trigger DPNs and ATO demands.
• Presumption rebuttal difficulty confirmed: In Re World Digital Gold Bullion Pty Ltd [2026] VSC 403, the Victorian Supreme Court confirmed that external funding arrangements require strict proof to rebut the insolvency presumption. Related-party facilities are viewed sceptically if the funder’s capacity to draw down is not established by admissible evidence.
• Director liability intersection: A statutory demand that goes unanswered does not just threaten the company. Under the director penalty notice regime, ATO demands and subsequent winding-up proceedings can trigger personal liability for directors for unpaid PAYG withholding and SGC. Directors should treat any statutory demand as a personal alert, not just a corporate one.
• Fixed fee option: Boss Lawyers offers a fixed fee for drafting and serving a statutory demand — call 1300 267 711 to discuss your matter.

Need Help Issuing a Statutory Demand?

At Boss Lawyers, our statutory demand lawyers in Queensland can prepare and serve a statutory demand on your behalf, and guide you through each step of the process — from initial assessment through to winding up proceedings if required.

We also assist companies that have received a statutory demand and need to respond within the strict 21-day deadline. Our debt recovery and commercial litigation teams work together to deliver practical outcomes.

Contact Boss Lawyers on 1300 267 711 to discuss your matter.

This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.