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New Director Penalty Laws Imminent

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You may remember back in May I blogged about new legislation that was proposed to expand the tax office’s power regarding director penalty notices. Today’s update is, this legislation has been before parliament for some time now, and it looks like they are getting close to passing it.

To refresh your memory, the proposed changes are summarised as follows:

  • expanding the director penalty regime to superannuation guarantee amounts;
  • ensuring that directors cannot have their director penalties remitted by placing their company into administration or liquidation when unpaid Pay As You Go (PAYG) withholding or Superannuation Guarantee (SG) amounts remain unpaid and unreported three months after the due date; and
  • restricting access to PAYG withholding credits for company directors and their associates where the company has failed to pay withheld amounts to the Commissioner of Taxation.

Those with a keen eye may notice a small change in this summary compared to our previous post. The draft legislation released by the Treasury Department back in May lead us to believe that ANY unpaid PAYG  or SG debt still unpaid 3 months after the due date would attract the new unremittable director penalty. This is not the case. As long as PAYG and SG debts are reported within 3 months of the due date, a Director Penalty arising from the debt CAN be remitted by initiating a liquidation or administration within the 21 day notice period.

This new legislation could be law in as little as two weeks so the take away for your clients (or company directors) is; if your company has an unreported tax debt more than 3 months old, you need to get your company into liquidation ASAP to avoid unremittable personal liability. Call us today for further advice

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