Federal Parliament has recently passed legislation to include Goods and Services Tax (GST) in the Director Penalty Notice (DPN) regime, and it is expected to come into effect on 01 April 2020.
Currently, company directors are personally liable for unpaid superannuation guarantee and withholding tax.
The personal liability for directors is now heightened, with the long-anticipated Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 being passed by the Senate on 05 February 2020 (awaiting Royal Assent at the time of writing).
The addition of GST to this list means the ATO will be able to pursue a company director personally for the majority of a company’s tax debt.
The new legislation makes the ATO’s powers to pursue GST forward reaching only – that is, the ATO can only chase GST debts incurred in the period starting 01 April 2020 or later with a Director Penalty Notice.
WHAT THE BILL MEANS FOR ORDINARY BUSINESS
- Director Penalty Notices now extend to unpaid employee superannuation, PAYG tax, GST, Luxury Car Tax and Wine Equalisation Tax liabilities in certain circumstances. This will mean that directors can become personally liable for these taxes.
- The ATO can retain refunds where a taxpayer has failed to lodge a return or provide other information that may impact the amount of a refund.
OTHER IMPORTANT TAKEAWAYS FOR UNSCRUPULOUS DIRECTORS
- The Bill prevents directors from improperly back-dating resignations or ceasing to be a director when this would leave a company with no directors.
- The Bill provides further powers to Liquidators and the Australian Securities and Investments Commission (ASIC) to prevent the unlawful transfer of assets during illegal phoenix operations.
SEEKING PROFESSIONAL ADVICE EARLY IS THE KEY
It's important to make sure you report PAYG, superannuation guarantee and now GST on time, even if the company can’t pay those tax liabilities by the due date.
If any of the above changes are causing you concern as a company director, please contact one of our Accounting Directors at The Peak Partnership for clarification and further advice.