Directors Personal Liability
Historically, to attach personal liability to a director, the Commissioner had to issue a Director Penalty Notice (DPN) allowing 21 days for a director to take action to avoid personal liability, ie by making the company to pay the debt or commence a formal insolvency appointment.
Changes to the DPN process came into effect on 30 June 2012 to reduce the scope for fraudulent phoenix transactions and or evade employee entitlements.
The key changes are:
- Directors’ penalties now include unpaid superannuation guarantee as well as unpaid PAYG;
- Directors can no longer discharge or extinguish a director penalty by placing a company into administration or liquidation when PAYG or superannuation guarantee remains unpaid and unreported 3 months after the due date;
- In certain cases, directors cannot access PAYG credits in their own tax returns where a company has not paid the ATO; and
- The Commissioner can estimate unpaid PAYG withholding and unpaid superannuation guarantee charge.
These changes are retrospective. They place further importance on making and paying lodgements on time.
Non-payment of statutory obligations is a key indicator of insolvency.
If you believe your company may be insolvent or on the verge thereof, we invite you to contact our team for a confidential discussion and analysis of your options and your directors personal liability. Please call us on 8410 9294 or send an email via this form.