Directors-PenaltiesDirector Penalty Regime Update

Following a number of recent cases involving directors claiming that penalties under the director penalty regime should not apply to them, the ATO has released an update to counteract any misunderstandings.

Directors have a legal responsibility of ensuring that their company meet PAYG withholding and SGC obligations, which is why the overarching objective of the regime is it to ensure that directors comply with certain taxation and superannuation responsibilities.

In an attempt to help directors (and those who are about to become directors) gain a better understanding of the regime, the ATO has issued a fact sheet that outlines obligations in regards to unpaid and unreported PAYG and Superannuation Guarantee Charge amounts.

These obligations include, but are not limited to:

  • Directors being personally liable for unpaid PAYG withholding or SGC amounts.
  • Penalties still applying even if an individual is no longer a director of a company, or is a newly-appointed director.
  • A director penalty notice will be issued to collect company debts where the company hasn’t engaged to resolve outstanding obligations.
  • Payment being the only option to remit the penalty if the associated company liability was not reported within three months of the due date.
Source: Practice Advantage Business Matters