The Australian Government recently introduced new legislation in a bid to maintain its budget surplus. It has extended its Director Penalty Notices (DPN) issued by the Australian Taxation Office (ATO) to also include unpaid taxes included in your BAS Returns such as Goods and Services Tax (GST), Luxury Car Tax (LCT) and Wine Equalisation Tax (WET). These taxes join PAYG Withholding and Superannuation which are currently subject to DPN’s.
From 1st April 2020, any unpaid GST, GST, LCT and WET will be the responsibility of the Directors of a company.
Keep in mind there are Two types of Director Penalty Notices.
1. Non-Lockdown DPN
If the tax or SGC is unpaid but reported to the ATO, the director penalty can avoid liability payment by:
- Having the company, or another party, pay the outstanding amount;
- Appointing an administrator;
- Placing the company into liquidation
An option needs to be implemented within 21 days from the date of the DPN to receive a remission of the director penalty.
Taxes must be reported within 90 days of the due date and SGC must be reported by the due date to qualify for a Non-Lockdown DPN. SGC can be reported by lodging the ATTACHED FORM with the ATO prior to the payment due date.
2. Lockdown DPN
If BAS Taxes or SGC is unpaid and not reported to the ATO, the director penalty can only be remitted by paying the outstanding debt. Payment of the outstanding debt needs to be made within 21 days from the date of the DPN.
If you have recently been appointed as a director of a company, you can be held personally liable for historical SGC and BAS liabilities if they remain unpaid and unreported within 3 months or more after the date of your appointment. New directors should take the necessary steps to ensure their companies’ SGC, PAYG and GST obligations are in order before their appointment.
It is critical that all directors (new and existing) update their personal details with the Australian Securities and Investment Commission (ASIC) to ensure they receive DPN as soon as possible. Directors only have 21 days from the date a Director Penalty Notice is issued to act and avoid personal liability.
It is important that directors start taking steps now to ensure that their tax, superannuation and GST obligations of their companies are in order. Don’t get caught out!