By Tony Castley – Director of Insolvency and Business Recovery
Directors would be aware that the failure of their company to comply with its taxation obligations, in relation to Pay As You Go (PAYG) and Superannuation Guarantee Charge (SGC), could lead them to becoming personally liable for outstanding obligations through the Australian Taxation Office’s (ATO) Director Penalty Regime known as the Director Penalty Notice.
With the recent passing of the Treasury Laws Amendment (Combatting Illegal Phoenixing) Bill 2019, the ATO has now added the Goods and Services Tax (GST) to the list of a company’s taxation obligations which they can recover personally from a director through the issuing of a Director Penalty Notice (DPN) where there has been non-compliance by the company.
The recent legislation also added the Luxury Car Tax (LCT) and the Wine Equalisation Tax (WET) to the list as well.
Whilst the provisions relating to PAYG and SGC have been in place for a number of years, the recovery of the outstanding GST in the Director Penalty Regime will come into effect on 1 April 2020.
Similar to the PAYG, the company must lodge its Activity Statement and pay the GST by the due date. Where a company lodges its Activity Statement within three months of the due date but fails to pay the GST in that time, then the ATO is entitled to issue a DPN to the directors. This is called a Non-Lockdown DPN and the director has 21 days to either have the debt paid, place the company into liquidation or appoint an administrator to the company in order to avoid personal liability.
Where a company does not lodge its Activity Statement or pay the GST within three months of the due date, the ATO will issue a Lockdown DPN which makes the director personally liable unless they can get the company to pay the debt within 21 days.
The message here is to ensure that the company’s reporting obligations are lodged by the due date, even if it cannot be paid immediately as this will give a director more options in trying to receive a remission of the director’s penalty
If you received a DPN or want to know more about the new legislation and how to comply, get in touch with us today.
