Reminder on Director Penalty Notices
Over the year, we have seen an increasing incidence of the ATO issuing Director Penalty Notices (DPN) to Directors of companies that are already in liquidation, most commonly on account of unpaid Superannuation Guarantee Charge (SGC) amounts.
In almost all instances, the claims have been issued sometime after the company was wound up and come like a bolt out of the blue to the Director, so we thought it wise to issue a reminder to advisers on the impact of the DPN regime.
Under the current law, (note changes extending the DPN regime to GST and other amounts are in contemplation) the ATO can recover PAYG withholding and SGC amounts after issuing a notice to the Director.
The timing of when the PAYG withholding or SGC amounts are notified to the ATO will determine what actions are available to achieve remission of the director penalties.
If the unpaid amount of PAYG withholding is reported within three months of the original due date, there are options that allow for the penalty to be remitted; similarly, if the unpaid amount of the SGC obligation is reported by the due date for the SGC statement, there are remission options.
The takeaway from this is that Directors must report PAYG and SGC obligations even if the amounts can not be paid, or run the risk of a personal liability coming home to roost.