Warning - Changes to Director Penalty Notices Provisions - Now a Reality - Worrells Solvency & Forensic Accountants

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Bankruptcy is a legal process where a trustee is appointed to administer an insolvent person’s affairs in order to provide a fair distribution of that person’s assets to their creditors.
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Part X—Personal Insolvency Agreement
Part X (Part 10) is a part of the Bankruptcy Act that allows a debtor to enter into an arrangement with their creditors without being made bankrupt.
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Official liquidation is a process of a Court ordering the winding up of a company’s affairs and the appointment of a liquidator in order to provide for a dismantling of a company’s affairs and a fair distribution to creditors.
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Voluntary Administration is designed to assist companies to either come to a formal arrangement with their creditors to pay their debts, or are quickly and inexpensively placed into liquidation.
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Director Penalty Notices
Company directors are legally responsible for ensuring that their company meets its pay as you go (PAYG) withholding, “net” GST (goods and services tax, wine equalisation tax and luxury car tax) and superannuation obligations. If a company fails to comply with their obligations to pay the debt by the due date for payment, company directors are held personally liable for the amount the company should have paid.
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Warning – Changes to Director Penalty Notices Provisions – Now a Reality

2 July 2012

Further to our ‘Worrells Warning – for Directors of Companies with PAYG Debt’, link: Worrells Notification, we can confirm that the legislation has now passed through both the House of Representatives and the Senate. It was passed by the Senate on 27 June.

The legislation is now awaiting Royal Assent to become law.

Under the new legislation, a director will no longer be able to avoid personal liability if their company has a PAYG debt when the following applies:

The debt is older than three (3) months; and
The debt was not reported to the ATO within three (3) months of the lodgement date.

Please be aware that the amendments will also:

Impose a liability, by way of a penalty, on directors for a company’s unpaid superannuation liability; and
Cause directors and associates (the definition of which is very broad) of directors to be liable for a new personal income tax liability for a company’s unpaid PAYG withholding liability subject to certain limits.

If you wish further information on the new provisions, please contact us.

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