Are you aware that as a director of a company, you can be personally liable for the ATO debt of that company?


Yep – That’s right! As part of the 2018 Federal Budget, the Government announced a package of reforms aimed at addressing illegal phoenix activity. One of the more significant measures is to extend the Director Penalty Regime to GST and other indirect tax debts of a company.


The Director Penalty Regime allows the Commissioner to make directors of a company personally liable for specified taxation liabilities of the companies they represent through the issue of a Director Penalty Notice (“DPN”).


How will it work?


The proposed changes will allow the Commissioner to make an estimate of an entity’s net amount in their Business Activity Statement. If the Commissioner makes an estimate, the entity is liable to pay that amount to the Commissioner and the director has 21 days to ensure the amount is dealt with to avoid becoming personally liable.


The impact on Directors


Company directors will be obligated to pay a Commissioner assessed net amount on the day the relevant tax period ends. Directors that cease to be directors after this date are subject to this obligation even if they cease to be directors before the due date. Any new directors appointed will also become subject to the penalty if the obligation remains unsatisfied for a further 30 days.


Directors who fail to lodge a BAS within three months of the lodgement due date will receive a lockdown DPN. This means the directors are automatically liable to the ATO for the unpaid GST and will not be entitled to remittance of a DPN penalty if the company then goes into liquidation. Learn more here. 


Are you at risk?


Who are the directors of your company?? Are you at risk? There are ways you can reduce your risk– Call us today to talk to one of our Advisors on 07 4743 4966.

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