Highlights

  • The Federal Court ordered Katsuyoshi Sadamatsu to pay $162,514.28 in compensation to underpaid workers at the former Miso restaurant.
  • ASIC disqualified Sadamatsu for five years after five companies he was involved with left $4,173,350.93 owing to the ATO.
  • The ATO was owed about 95.4% of the five companies' combined $4,375,875.63 in unsecured debts when ASIC decided.
  • The court will hear Fair Work Ombudsman v Sadamatsu again on penalties in February 2027.

If you run a company, you answer to more than one regulator, and they do not wait for each other. A Sydney restaurant director has just shown how that plays out. Five failed companies owed the ATO more than $4.17 million, ASIC banned him from managing corporations, and on top of that the Federal Court has ordered him to pay $162,514.28 to underpaid staff. The compensation order is a ruling. Further penalties have not yet been decided.

The case and the orders

The case is Fair Work Ombudsman v Sadamatsu [2026] FCA 1568, decided by Justice Elizabeth Raper. It concerns Katsuyoshi (Ken) Sadamatsu, director of Miso Pty Ltd, which operated the former Miso Japanese restaurant at World Square in Sydney and went into liquidation in 2024. The workers were mostly visa holders aged 19 to 24. A penalty hearing is set for February 2027.

$4.17 million owed to the ATO and a five-year ban

The tax figures come from an earlier ASIC decision. At that time five companies he was involved with had combined unsecured debts of $4,375,875.63, of which $4,173,350.93 was owed to the ATO. That is about 95.4% of the total, leaving $202,524.70 for other unsecured creditors. ASIC found he failed to ensure the companies met their ATO obligations and kept proper records.

ASIC can disqualify a person for up to five years where they have been an officer of two or more companies that failed within seven years and the ban is justified. A disqualified person generally cannot act as a director or help manage a company, and breaching the ban is an offence.

Why the ATO side matters for directors

Under the director penalty regime, directors can become personally liable for certain unpaid company debts: PAYG withholding, GST and the superannuation guarantee charge. The ATO enforces this through director penalty notices (DPNs), and resigning does not automatically remove liability for debts that arose during a person's time as director. The case does not say whether DPNs were issued.

Tax Ombudsman Ruth Owen's latest complaints report found debt calculation, hardship release and DPNs together made up just over half of debt complaints. Her office is also reviewing how the ATO administers DPNs, with submissions closed on 29 September 2026.

How a director penalty can arise

Imagine a hypothetical restaurant company that withholds $30,000 in PAYG over two quarters and owes $18,000 in GST, paying neither. That is $48,000 within the regime. If the amounts were reported on time, a director who receives a DPN can generally avoid personal liability within 21 days by paying the debt, appointing an administrator or small business restructuring practitioner, or liquidating the company.

If the amounts were not reported within three months of the due date, the DPN is generally a "lockdown" notice, and administration or liquidation no longer removes personal liability. The example simplifies the rules.

Underpayments and record-keeping

The ATO and the Fair Work Ombudsman both focus on hospitality, where cash pressure can lead to unpaid tax and wages together. In March 2026 the ATO said it receives almost 1,000 tip-offs a week. It also noted that the maximum Fair Work Act penalty per contravention, for businesses with 15 or more employees, is the greater of $495,000 or three times the underpayment. It is a general maximum, not a forecast for this case.

ASIC's finding on records matters because without accurate payroll and accounting records it is harder to show what was owed to staff and the ATO, and harder for liquidators to recover anything for creditors.

Dates to watch

Watch February 2027 for the penalty hearing and April 2027 for the Ombudsman's DPN report. The ATO was scheduled before the Senate Economics Legislation Committee on 28 October. In September, Commissioner Rob Heferen flagged that the $115 billion collectable debt figure was likely to have grown.