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Company Director’s Personal Liability to the ATO

17-05-2019

If you are a director, you can become personally liable for the company’s unpaid pay-as-you-go (PAYG) withholding, superannuation guarantee (SG) and superannuation guarantee charge (GC) payments to the ATO under its “director penalty regime”.

Since 2015 the failure to pay would give rise to the ATO issuing a director penalty notice for the unpaid or assessed amount to a director. The notice was generally issued three months after the payments were due or should have been reported.  On receipt of the notice a director had 21 days to act before becoming personally liable. A director could avoid the liability by either paying amounts owed, appointing an administrator for the company or commence winding up the company. Failing to do this resulted in the director penalty becoming “locked down”.

From March 2019 the law changed. For SG and SGC amounts there is no three month period or 21 days to act after the issue of the director penalty notice. Now the amounts owed are locked down after the due date. The due date is usually 28 days after the end of each quarter.

The take-away point is that for SG and SGC payments the failure to report or pay will automatically make a director personally liable.  The legislation gives the ATO some discretion. We can provide advice if you find yourself in this situation. Simply give us a call on 07 54444 1022 or fill out our Contact Us form on the website.

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