Since the amended Directors Penalty Notice (DPN) law came into effect in June this year, we have observed a consistent but not excessive flow of winding ups applications, initiated by the Australian Taxation Office (ATO). The bell has now been sounded to say that this time has come to an end.
The ATO has just finished their national ‘tour of duty’ in spreading the word of the DPN regime. The Worrells offices welcomed the opportunity to have the ATO to enlighten all staff as to the objectives of the policy and were delivered from none other than ‘straight from the horse’s mouth’.
It is expected that now the ‘socialising’ of the policy is concluded, that the time is nigh in director penalty notices becoming a reality for directors across the country.
To recap the position;
Under the pre-existing legislation the ATO had the ability to issue a DPN upon a director for any outstanding PAYG owing by the company. The director had the option of either paying the outstanding PAYG debt in full or putting the company into external administration. If the director failed to do either of these within the 21 day time period of the notice, the director was then unable to extinguish the personal liability of the PAYG debt of the company.
Under the new legislation the position in relation to the issuing of a DPN as outlined above still exists, although the debt now extends to unpaid superannuation. Additionally, a director will no longer be able to avoid personal liability if their company has a PAYG/Superannuation debt which is unreported for three months after its due lodgement date.
Please be aware that the amendments will also provide the ATO with the ability to withhold any tax refunds owing to directors and associates (the definition of which is very broad) where there is an outstanding PAYG liability of the company, subject to certain limits.
It is imperative to know that the above has a retrospective effect for all outstanding PAYG and the statute of limitations does not apply.
We commend the ATO in taking the initiative to communicate with a range of stakeholders. We invite any business professionals who are concerned about their client’s position to contact us.
The ATO also has further information on their website at the following links: