Director letters were sent to companies whose directors may be in breach of their obligations to ensure that the company they represent met all its PAYG withholding, superannuation guarantee charge, and GST obligations throughout March.
It is important not to ignore these warnings.
Directors are personally liable if they fail to actively manage debts of the company under the director penalty regime. Former directors and current directors are both liable.
A director penalty notice will be issued to each director by the ATO, in order to collect this debt. Among the options available to the ATO to recover the unpaid amount are:
- Notices of garnishee against income,
- Offsetting the penalty against the director’s tax credits, or
- Taking legal action against the director for recovery.
A penalty may be remitted in some cases, but this depends on when the PAYGW, GST or SGC amounts are lodged via BAS to the ATO. There are situations in which the penalty may be remitted, for example, when an administrator or restructuring consultant is appointed to the company or when it begins its winding-up process. If reported to the ATO within three months of the due date, it is normally possible to claim PAYGW and GST amounts. A SGC statement must be submitted by its due date in order to report the unpaid amount.
Payment of the debt in full is the only way to remit the penalty if the BAS returns are not lodged the ATO by the required deadline. The directors will still be liable for their actions even if the company is wound up at this stage.
Please contact us as soon as possible if you have received a warning letter or a director penalty notice from the ATO.
