HOW THE LAW WORKS
The director penalty regime applies to:
- unpaid PAYG withholding amounts
- unpaid SGC obligations applicable from and including 30 June 2012 (ie the June 2012 or later quarters).
If you are a company director and the company has outstanding PAYG withholding and SGC obligations, you will become personally liable for a penalty equal to these amounts.
The directors of a company that fail to meet a PAYG withholding or SGC liability in full by the due date each become personally liable for a penalty equal to the unpaid amount. These penalties are reduced by any amounts paid towards the original liability and are sometimes referred to as parallel liabilities.
The Commissioner will issue a director penalty notice (DPN) and wait until the 22nd day after issuing that notice before commencing proceedings to recover the debts.
A DPN will be sent to the director at the address listed with the Australian Securities and Investment Commission (ASIC) and will describe the options that are available to a director in order to achieve remission of the director penalties. Usually the company representative or tax agent will have been made aware of the liability to director penalties. The DPN will only be posted to the director of the company.
A DPN will list the following options available to a director for discharging a penalty within 21 days of the notice being issued.
For unpaid amounts that were reported within three months of the due date:
- payment of the debt
- appointment of an administrator under section 436A, 436B or 436C of the Corporations Act 2001
For unpaid amounts that were not reported within three months of the due date the only choice is payment of the debt.
If these actions are not taken before the 22nd day after the DPN is given to the director, the penalty is not remitted and the director is liable for the penalty amount until it is paid in full.
For more information the ATO web site outlines the Director Penalty Regime
Tips for Directors – Registered Office
The ATO and other creditors will use the registered address of your company as recorder with ASIC to send you documents.
If the address recorded with ASIC is incorrect you are still deemed to have received the correspondence within normal delivery times. It is no excuse that you did not receive the documents.
Having the wrong registered address can cause you to lose critical time to fix things or worse.
- Check your registered address – have you moved or changed accountants.
- Update your details. Remember it can take 7 to 14 days for ASIC to update your details
- Check your mail regularly if your registered address is different to your normal mailing address.
- Talk with your accountant to ensure they are following up notices addressed to your company.
WE CAN HELP
The Director Penalty Notice regime is fairly complex and very rarely the ATO issues are the only thing impacting on your business.
It is crucial that Directors act immediately and get the right advice to know where they stand and avoid personal liability for their company’s super and tax debts.
You may still have options to save your company and avoid personal liability. But you need to act. A few weeks or a month can make all the difference in saving your company or protecting your home and other personal assets.
The options for every company are different and the right decision is vital in order to maximise the outcome for you.
Ignoring a Director Penalty Notice could lead to financial catastrophe and cause you to become bankrupt and lose your family home and assets.
What our qualified staff do is use their extensive knowledge and experience of business and the liquidation process to ensure you get the solution that is right for you. You will have to tools and resources to give the business the best opportunity to survive. Further you will have all the information and support that you need to make the decision whether to liquidate your business or not while protecting your interests.
In fact whether a Director Penalty Notice has been issued or the company is just behind with taxes our qualified consultants will be able to explain your position and identify the specific solutions for you.