legal
| anthony nolan
Overdue
Superannuation
Guarantee obligations and
director penalty notices
•
tax obligations
•
T
he policy objective of the Director Penalty Regime is to ensure that directors cause their
company to meet certain tax obligations or promptly put the company into liquidation or
voluntary administration. Under the tax laws, companies have an obligation to withhold
amounts from certain payments they make, such as wages to employees and fees to directors.
There is a further obligation to pay those withheld amounts to the Tax Office and to pay estimates of
those amounts where applicable. Previously, if a director was served a Director Penalty Notice (DPN)
they could remove personal liability by placing their company into administration or winding it up providing it was within the DPN period, regardless of the length of time that the company had not
reported their PAYG withholding or super guarantee liability.
Anthony Nolan
is an Accountant
with Greenhalgh
Pickard and can
The Director Penalty Regime makes directors of companies who fail to comply with their obligation
to pay amounts withheld under the PAYG withholding regime to the Tax Office (or an estimate)
personally liable for the amount that the company should have paid, through imposition of a penalty.
This penalty takes effect at the end of the last day the company is due to meet its obligation. The Tax
Office does not need to issue any notices or take any action to pursue directors of companies that
fail to meet their PAYG obligations. It is automatic as soon as the debt is not paid by the due date.
be contacted
on (07) 5444 1022
or anthony@
greenhalgh
pickard.com.au
The Director Penalty Regime makes directors of
companies that fail to comply with their obligation to
pay amounts withheld under the PAYG withholding
regime to the Tax Office personally liable.
Previously a director could, before the end of the DPN period, make use of their ability to benefit
from using PAYG withholding credits to offset their own income tax liability when the company had
not paid these withheld amounts to the Tax Office. The director could effectively say the company
has paid the Tax Office an amount in PAYG tax then put the company into liquidation. The director
could then claim those credits and receive a tax refund. Any advisor engaging in this conduct would
be subject to severe consequences from the Tax Office.
On July 1, further disincentives were introduced for companies who avoid their tax and employee
obligations. These new changes have been implemented to deter directors from engaging in
fraudulent phoenix activities and to improve the regulatory environment for businesses that comply
with the tax and super laws.
10 Australian Window Association Summer 2013