Operating under a corporate structure does not guarantee that your personal assets are protected.
If a company does not meet its pay as you go (PAYG) withholding or superannuation guarantee charge (SGC) obligations, the ATO may recover these amounts from you personally as a director of the company.
The ATO has statutory powers to issue Director Penalty Notices (DPN) that allows it to pierce the corporate veil and make directors personally liable for their company’s debts.
ATO Widening the Net
With the introduction of Single Touch Payroll the ATO has an unprecedented level of visibility of superannuation and PAYG withholding information.
ATO Deputy Commissioner James O’Halloran said the agency is now heavily focused on reducing the incidence of non-payment of super guarantee (SG) in the community.
“We’re now starting to actively use the data to warn employers who appear not to be paying the required SG on time, in full or at all, that they should change their behaviour.”
Further Mr O’Halloran stated:
“In terms of following up SG payment from our casework, we also issued some 5,000 individual director penalty notices (DPNs) for 3,600 companies to a combined value of $283 million.”
The Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 currently before Parliament proposes, amongst other matters, to extend the DPN regime to GST.
What you need to do
- Lodge BAS and SGC Statements within the required timeframe whether this liability can be paid at the time or not;
- Make sure directors’ postal addresses are up to date in records maintained by the ASIC. DPN’s are sent to directors’ personal addresses as recorded with ASIC;
- If you receive a DPN, urgently seek professional advice as you have a short timeframe (less than 21 days) to comply with the notice;
- Undertake a review of your asset protection strategies, understand the risks and adopt measures to protect personal and business assets.
Seeking professional advice early is the key
If you would like assistance with any of the above issues, please contact Bradley Hellen or Nigel Markey on (07) 3023 1300.