Extra Director Personal Liability – a reprieve as new laws delayed
I’ve banged on about the proposed new Director Personal liability laws in numerous blogs in the past few months and how Treasury was pushing them through based on a few furphies. The legislation was before Parliament this month. Well directors can breathe a little easier … for a while. It was announced this week that the legislation had been withdrawn but will be reintroduced in early 2012.
You’ll recall that the laws would have dramatically increased the prospect of automatic director personal liability for tax debts – don’t lodge your Quarterly BASs for three months then a director would have been automatically personally liable for PAYG and Super contributions.
I’ve expressed some firm views on this topic. In brief:
- The ATO and Treasury expressed the view that Phoenix Company activity is bad and new legislation is needed – no argument there;
- the news laws address the above – lots of argument there. The new laws had nothing to with Phoenix Company activity. The proposals applied to all companies and dramatically increased director personal liability.
So if it is back to the drawing board my suggestion to the legislators is ….. if you want to crack down on Phoenix Company activity then start by defining it!! Nowhere in Tax Legislation, Corporations Law legislation, ASIC policy statements or ATO policy statements is it actually defined. There are policy statements saying it is bad but not what it is. Yes, there are vague outlines but nothing specific enough to be applied.
Further, the legislation that was being proposed was in fact a move to enforce better compliance in the lodgement of tax returns. Again, I agree that is needed. But if that is the target then state it as such and stop with the Phoenix company furphy.