Australian Taxation Office (ATO) 

director penalty notices and personal liability of directors

LATEST:

To read an important explanation by THE NATIONAL TAX & ACCOUNTANTS ASSOCIATION (NTAA)- JULY 2014

regarding the Superannuation Guarantee Charge, click here for pdf file

IN GENERAL:

The legislation on this subject is in the Tax Administration Act 1953, Schedule 1, "Collection and Recovery of Income Tax and Other Liabilities".

Amendments to the Taxation Administration Act 1953 have significantly increased the risk that a director may become personally liable to the ATO for a company’s unpaid PAYG withholding liabilities. Under the newly amended Act, a director will become personally liable for unpaid PAYG withholding in any circumstance where:

• the PAYG withholding liability is more than 3 months old; and

• prior to those 3 months passing, the director did not notify the ATO of the liability.

Put another way, liability can only be avoided (outside of the company actually paying) if:

• the company is either placed into liquidation or administration within 3 months of the PAYG withholding liability becoming owing; or

• within those 3 months, the ATO is notified of the PAYG withholding liability becoming owing. In this case, the director will escape liability if the company (including after the 3 month period) is ultimately placed into administration or liquidation.

The changes also impact certain superannuation payments and expand the number of people who may be liable for unpaid PAYG withholding.