There has been a significant expansion of the ATO's Director penalty Regime this month. Every company director should pay close attention to these new rules to minimise the chance they are personally liable for some of their company's Tax obligations.
Directors of a company, including corporate trustee companies, are already personally liable for PAYG Withholding and Superannuation Guarantee obligations under the Director Penalty Regime.
On 5 February 2020, the Senate passed changes to the regime, which expanded the scope of the regime to include:
- Goods and Services Tax (GST)
- Luxury Car Tax (LCT)
- Wine Equalisation Tax (WET)
The changes to the regime are likely to commence for Tax periods from 1 April 2020. The expansion to include outstanding GST, LCT & WET is likely to have very significant implications for company directors.
The ATO Commissioner can issue an estimate for overdue activity statements and directors will have up to 21 days from the date of issue to deal with the ATO by lodging and paying the correct amount of GST. Failure to do so may result in company directors being personally liable for these amounts.
New directors should conduct due diligence on a company's Tax payment history before being appointed. Existing directors should pay close attention to their company's activity statement lodgements and payments. Furthermore, directors who resign may still be liable under the Director Penalty Regime for liabilities arising during their tenure as a director.
If you require further information about the newly expanded regime or your business is in any form of difficulty in meeting any of the above obligations, we strongly recommend contacting your business advisor at Hall Chadwick for a detailed review of your business' health. Your adviser will work with you to navigate through any challenges your business may be facing.
