On Wednesdays (other than wearing pink) we’ll bring you a legal update so you can up your legal knowledge game.
What?
During 2022, the Australian Tax Office (ATO) pumped out 18,500 director penalty notices (DPNs) to directors of Australian companies. A further 52,000 directors received warnings. A DPN is a tool that the ATO can use to come after company directors personally when their companies fail to meet tax debt payment obligations.
So What?
If you’re a director of a company that hasn’t paid its taxes or lodged its business activity statement, instalment activity statement or its superannuation guarantee charge, then in issuing a DPN, the ATO can do a number of things including:
- Issuing garnishee notices: basically this mean they can deduct amounts owed from bank accounts or wage entitlements.
- Offset tax owed by the company against tax credits of the director.
- Commencing legal proceedings against the director personally.
Now What?
Like Benjamin Franklin said, ‘death and taxes.’ So if you’re a director, make sure the company pays its taxes and lodges its statements! If you’re the unlucky recipient of a DPN, then don’t ignore it as you’ve got 21 days to respond from the time it’s sent (not received). The ATO will look more favourably if you are pro-active and engage with them to resolve the outstanding taxes. Seek out tax and legal advice ASAP and prioritise your reporting obligations over the payment of the outstanding taxes as there are more options available if your reporting obligations are at least up-to-date.
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