Got a section 47B Compliance Notice from the OSR? If so, personal liability for Payroll Tax debts awaits!
It is not well known that there is State tax legislation that provides an avenue for the Office of State Revenue to make a director personally liable for a company’s Payroll Tax debts. It’s a bit obscure but, yes, we have seen it in the last few months.
It is well known that a director can be made liable for a company’s PAYG and Superannuation Guarantee debts. That gets lots of coverage as it is common for the ATO to use its powers. Less well know is State legislation re Payroll Tax. By way of example, section 47B of the Taxation Administration Act in NSW applies. Under that section:
- if a company fails to pay a Payroll Tax assessment then the OSR can serve a Compliance Notice on a current director or anyone who was a director at the time the company became liable;
- that Notice advises the director that they have 21 days to act or they will become personally liable for the Payroll Tax debt.
So what actions can be taken? A director can avoid personal liability by taking one of the following actions within the 21 day period:
- get the company to pay the Payroll Tax debt;
- get the company to come to a “special arrangement” regarding repayment of the debt – presumably a payment plan;
- appoint a Voluntary Administrator; or
- appoint a Liquidator.
So the message is, if you get a section 47B Compliance Notice, then a director needs to act… and act within 21 days.