The ATO have announced that they will be targeting unpaid debts very soon, with only 21 days to pay.
They will first be sending out letters stating that they might send out a penalty notice soon.
This will affect many thousands of directors in Australia.
The letters being sent out explain that the ATO may issue a ‘Director Penalty Notice’ (DPN) and advise that a director could be personally liable for their company’s tax debt.
Who are the ATO targeting?
Directors of companies with an overdue ATO debt.
This is for tax periods from 1st April 2020 onwards:
- pay as you go (PAYG) withholding and superannuation
- goods and services tax (GST)
- wine equalisation tax (WET)
- luxury car tax (LCT)
What happens if a director penalty notice is issued?
It depends on the type of DPN. There are two types the ATO issues:
Non-lockdown DPN
This is issued when statements are lodged (within three months of the due date) but debts are unpaid.
To remit the penalty issued under a non-lockdown DPN, directors (joint and severally) must consider the following to avoid their personal liability the amount nominated on the notice:
- To place the company into liquidation
- To place the company into administration
- To appoint a small business restructuring practitioner and commence the small business restructuring process
- For the company to pay its debt obligations to the ATO in full
Lockdown DPN
This is issued when statements have not been lodged (within three months of the due date) and debts are unpaid.
Directors can only remit this liability by paying the amount in full.
How long do directors have to act?
Directors have 21 days from the date of notice to act accordingly – which is important to note because it’s not from when you receive it. If there is a postage delay, this could impact this.
Where will the notice be sent?
These letters will be sent to the address registered on the ASIC’s company record. For our managed clients, this should be our address.
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