Director penalty law extended to GST

Recent changes to director penalty law and bankruptcy law affect the personal financial liability of company directors. Talk to us about your legal responsibilities and your personal liability.

Director penalty notices (DPNs) have existed for some years now to recover unpaid PAYG withholding and superannuation. This law means that if a company did not pay PAYGW and superannuation obligations on time, company directors could become personally liable for the amount owing, as well as penalties.

The new law started on 1 April 2020 and extends the penalty regime to allow recovery of unpaid GST, wine equalisation tax (WET) and luxury car tax (LCT). The new provisions significantly increase the personal risk that directors take in committing to pay ATO obligations.

The DPNs have narrow time limits in which to be addressed – directors must contact the ATO within 21 days of the issue date. While the new law is aimed at capturing illegal and fraudulent activity by directors, there may be legitimate operators with cash flow difficulties who are caught out by this law. In this case, the director is advised to contact the ATO to discuss the situation.

If you are considering taking on a new position for an existing company, check the status of financial obligations of that company before accepting the position, as new directors may become liable for existing debts.

COVID-19 and Temporary Change to Bankruptcy Law

Usually there are strict rules about trading while insolvent; however, there are temporary changes to bankruptcy laws as part of the economic response to the Coronavirus which may allow directors more flexibility in continuing to trade during the Coronavirus downturn. The changes allow for more time and an increased creditor threshold, but do not change the legal liability of directors.

Talk to us About Your Director Duties

  • Are you clear about your legal responsibilities as a company director?
  • Are you aware of the extent and financial implications of your personal liability?
  • Have you given director guarantees to any suppliers that might increase your personal liability?
  • Are your company’s ATO lodgements up to date? Check that forms have been submitted by the due date even if payment cannot be made. Having payment plans in place reduces the likelihood of a DPN being issued.
  • Are your ASIC details correct? If a notice is issued to an earlier address listed on ASIC, and the director does not act on the notice within 21 days, legal recovery will go ahead regardless.

Contact us to understand the implications of the new director penalty regime and the potential financial liability, particularly considering the current Coronavirus situation and changes to bankruptcy laws.

Paul Burke
Paul Burke
Paul is a Business Finance and Growth Coach for motivated small and medium (SME) business owners who are ready to find their freedom. A 30 year veteran accountant and fellow of CPA Australia, Paul has a Diploma of Management, trained as a Gazelles International Certified Coach, is a successful business owner, family man, committed community volunteer and freedom finder. Paul knows how to sustain and grow a business that supports lifestyle goals. He understands why you started your business. What you hope to achieve. What you’re struggling with. He’s a font of accounting, finance and business growth wisdom who’ll support you every step of the way to help you achieve your goals in business, and life.
Paul Burke
Paul Burke
Paul is a Business Finance and Growth Coach for motivated small and medium (SME) business owners who are ready to find their freedom. A 30 year veteran accountant and fellow of CPA Australia, Paul has a Diploma of Management, trained as a Gazelles International Certified Coach, is a successful business owner, family man, committed community volunteer and freedom finder. Paul knows how to sustain and grow a business that supports lifestyle goals. He understands why you started your business. What you hope to achieve. What you’re struggling with. He’s a font of accounting, finance and business growth wisdom who’ll support you every step of the way to help you achieve your goals in business, and life.

Share:

Share on facebook
Share on twitter
Share on linkedin
Share on email

More Posts

Efficiency through automation

Technology can be transformative: improving leverage, consistency, efficiency, risk management, induction and training, scalability and saleability. What software have you adopted post-COVID as part of your #BusinessRecovery Plan?

Facing challenges? Change your mindset

In today’s world, we are constantly having to tackle new things and learn new skills. It can be overwhelming,… if you let it. Next time you feel like saying ‘I can’t do it’, replace it with ‘I can’t do it, yet’.

Survive to Thrive

Are you ready to THRIVE? We’ll show you how! Sign up below.

Business

Efficiency through automation

Technology can be transformative: improving leverage, consistency, efficiency, risk management, induction and training, scalability and saleability. What software have you adopted post-COVID as part of your #BusinessRecovery Plan?

Business Health Check

Is your business working FOR you?

Do you have the financial, time and mind freedom you need to live the lifestyle you imagined from the start?

In just a minute, figure out if you’re taking footsteps in the right direction on the path to freedom.

Thanks

Click the button below to Download

Thanks!

Click the links below to download your freebies.

Rembemer, we’re here to help! Get in touch anytime or Book in for a free consultation.

Issues downloading? shoot us an email at [email protected]

Credit Management Guide + Phone scripts

We don't spam, we promise.