ATO Director Penalty Notices
Directors Personal Liability for Company Tax Debts and what to do if you receive a Director Penalty Notice
Directors may be PERSONALLY liable for the following:
- unpaid PAYG withholding amounts
- unpaid SGC obligations applicable from and including 30 June 2012 (ie the June 2012 or later quarters).
Under the ATO’s director penalty regime the commissioner may issue a Director Penalty Notices (DPN), there are two types of DPN:
- A non-lockdown DPN
- A lockdown DPN
An example of a NON Lockdown Director Penalty Notice is attached.
Non-lockdown DPNs apply for unpaid amounts of PAYG and SGC that were reported within three months of the due date of the BAS. A director has 21 days after the issuing of a director penalty notice to avoid personal liability. Personal liability is avoided if one of the following happens:
- payment of the debt
- appointment of an administrator under section 436A, 436B or 436C of the Corporations Act 2001
- having a liquidator appointed to wind up the company
If one of the above actions is taken before the 22nd day after the DPN is issued to a director the director will not become personally liable under the DPN.
Lockdown DPNs apply for unpaid amounts of PAYG and SGC that were, not reported within three months of the due date of the BAS, the only option available to have the associated penalty remitted is payment of the debt. The penalty cannot be remitted by placing the company into voluntary administration or liquidation. Therefore, the director is personally liable for the amount specified in the DPN. But remember the ATO must issue a DPN to the directors registered address.
As a new director, if, after three months from your appointment, there are unpaid and unreported liabilities due before your appointment, the only option available to have the penalty remitted is to pay the debt. The penalty cannot be remitted by placing the company into voluntary administration or liquidation.
AN EXAMPLE TO DO LIST FOR DIRECTORS
- Ensure BAS’s are lodged on time or at least within 3 months of the due date.
- Make sure your company pays the super guarantee to its employees’ chosen fund by the cut-off date (the 28th day of the month following the end of the quarter).
- Ensure your address details are up to date with ATO and the Australian Securities and Investment Commission (ASIC).
- Even if debts cannot be paid all returns should still be lodged within 3 months of the due lodgement date.
Immediately contact Sondergaard Accountants to review your situation if you receive a Director Penalty Notice or have unpaid tax liabilities or any other cash flow concern. We are your first port of call in a storm and will seek solutions and strategies for you! If there is no practical alternative, then we will introduce you to the appropriate Liquidators and Administrators in our network and provide the strategic support you need. Take action early!