Director Penalty Notices

Director Penalty Notices

The Australian Taxation Office (“ATO”) is able to recover a company’s unpaid PAYG Withholding Tax (“PAYG Tax”) and unpaid superannuation contributions from the company’s director(s) by issuing the director(s) with a Director Penalty Notice.

A summary of some of the ATO’s powers to recover amounts from a company’s directors under Director Penalty Notices follows:-

  • The ATO is able to issue Director Penalty Notices to a company’s director(s) in respect of the company’s quantified and unpaid PAYG Tax.
  • In circumstances where a company has lodged its Business Activity Statements (“BAS”) within three (3) months of the due date for lodgment, then a company’s director can avoid liability under the Director Penalty Notice if the company is placed into liquidation within 21 days of the date of the Director Penalty Notice.
  • In circumstances where a company has not lodged its BAS within three (3) months of the due date for lodgment or the BAS have not been lodged at all, a director cannot avoid personal liability under the Director Penalty Notice.
  • The ATO is also able to issue Director Penalty Notices to a company’s director(s) in respect of unpaid compulsory superannuation contributions, which are payable to the ATO as Superannuation Guarantee Charge (“SGC”).
  • In circumstances where a company has notified the ATO of unpaid SGC by lodging SGC Statements within three (3) months of the due date for their lodgment, then a company’s director can avoid liability under the Director Penalty Notice if the company is placed into liquidation within 21 days of the date of the Director Penalty Notice.
  • In circumstances where a company has not lodged SGC Statements within three (3) months of the due date for lodgment or the SGC Statements have not been lodged at all, a director cannot avoid personal liability under the Director Penalty Notice.

Further information regarding Director Penalty Notices is available in this Pearce & Heers article.

Given the serious effects the Director Penalty Notice regime may have on company directors’ personal financial positions, directors and their advisors should obtain appropriate advice and assistance when faced with the circumstances set out in this article.

Information and Advice

If you are seeking advice or assistance regarding Director Penalty Notices, please contact our Brisbane or Gold Coast office for an initial obligation free consultation.