A DPN is issued by the Australian Taxation Office (“ATO”) to make a director personally accountable for two types of overdue debts owing by a company:
1) Pay as you go (“PAYG”) withholding; and
2) Superannuation guarantee charge (“SGC”).
What does this mean if you are a director?
As a director you are responsible for making sure the company meets its’ payment obligations. The ATO can legally pursue you personally to recover outstanding PAYG withholding and SGC liabilities owed by the company.
Be Aware – New Directors
You will be personally liable for any outstanding PAYG withholding and SGC obligations after 30 days of your appointment as a new director of the company.
- Check for any unpaid or unreported PAYG withholding or SGC liabilities.
- Consider options available to you to avoid director penalties if the company has these outstanding liabilities prior to your appointment.
- Even if you resign, you may still incur director penalties in certain circumstances.
What are your options if you receive a DPN?
Generally three options are available to you:
1) Pay the outstanding debts in full;
2) The company appoints an Administrator; or
3) The company appoints a Liquidator to wind up its’ affairs.
Note there are statutory defences and recovery options which may be available to you should you receive a DPN.
DPN’s impose strict timeframes. Should you receive a DPN we recommend contacting Pilot Partners as soon as possible to assess your options. Please contact Brad Hellen, Ann Fordyce or Nigel Markey from our Restructuring division on (07) 3023 1300.
In the works…
Currently DPN’s only extend to a company’s PAYG withholding and SGC liabilities. However new legislation may see the introduction of a DPN’s scope extending to cover outstanding GST liabilities of a company. Watch this space for further updates.