It’s all in the timing.
From 1 April 2019, one aspect of the Director Penalty Notice (DPN) regime was amended regarding the reporting date for unpaid superannuation.
Previously, the DPN regime said that directors must report their unpaid superannuation within three months of the lodgement day for the superannuation guarantee charge statement. This timing applied to either reporting and paying or just reporting the unpaid superannuation amount. The relevance of the timeframe around lodgement determines whether directors would either receive a non-lockdown DPN or a lockdown DPN from the Australian Taxation Office (ATO).
Through the Treasury Laws Amendment (2018 Measures No. 4) Act 2019 this timeframe has been changed to remove the three-month lodgement window for superannuation guarantee charge statements. No change has been made to the three-month rule from the PAYG due date.
Directors who want to extinguish their personal liability and received a DPN should note that the penalty will be remitted if the company pays the outstanding tax at any time. Director penalties will also be remitted if, at any time on or before 21 days of a DPN being issued:
- The company reported its PAYG withholding within three months of the due date for lodgement and lodged its superannuation guarantee statements within one month and 28 days after the end of the quarter that the superannuation contribution relates to (i.e. it is a non-lockdown DPN); and
- The company goes into voluntary administration or liquidation.
However, if the company fails to report its PAYG withholding or SGC liabilities within the above periods, the director penalties cannot be remitted if an administrator or a liquidator is appointed. The DPN regime imposes a lockdown on a director for liabilities that are unpaid and unreported within their required lodgment periods.
For more information on the DPN regime, go to our website factsheet (click here) that covers:
- payment by directors, and associates
- recovering withheld amounts
- estimates and director penalty notices
- recovering and remitting director penalties
- previous directors
- new directors
- right of indemnity and contribution.
As always, if you or your clients require any insolvency advice please contact your local Worrells office for help.