Plutus Payroll says it's close to settling dispute with the Australian Taxation Office

Embattled outsourced payroll firm Plutus Payroll says it is close to resolving its dispute with the Australian Taxation Office, which could see contractors paid within the coming days.

Plutus announced that it was involved in a commercial dispute and would immediately suspend operations on 2 May, leaving payments from 27 April to 2 May in jeopardy and sending IT contractor clients into a frenzy over whether they would eventually be paid.

A week later, Plutus revealed that the dispute was with the ATO, claiming the agency froze its bank accounts, and that it had filed legal proceedings against the ATO in federal court as a result.

In its latest update to contractors, Plutus said it is working in good faith with the ATO for a solution where all of its contractors can be paid.

"Presently, we are providing further information to the ATO about the amounts that are due to you. Plutus and the ATO are hopeful that a practical resolution and payment of those amounts can be made in the coming days. This positive turn of events is encouraging and we commit to continuing to provide you with updates as we work through the details of this practical resolution," Plutus wrote to contractors.

"Once we have resolved the issue of the amounts due to our contractors with the ATO, Plutus intends to continue to work with the ATO to resolve our dispute through their internal objection process."

It's a far cry from the language used by Plutus last week, when the company labelled the ATO as "draconian" and "unfair" for allegedly freezing its bank accounts "without prior warning or any consultation," Plutus claimed.

This time, Plutus said it acknowledged the role of the ATO to ensure companies were compliant and that employer contributions are paid.

"We would have preferred to have had the opportunity to address the ATO's concerns before they took the action they did - so that we could have better protected your interests. But today we appreciate that the ATO shares our concern that our contractors, as third parties to our dispute with the ATO, are not disadvantaged while we work through the resolution of that dispute," Plutus said.

An ATO spokesperson said the agency does not comment on tax affairs of any individual or entity due to obligations of confidentiality under the law.