Company Directors take note - Director Penalty Regime legislation changes you need to know about.
Effective from 1 April 2020, directors will have increased exposure to company debt with outstanding monies owed related to Goods and Services Tax (GST), Wine Equalisation Tax (WET) and Luxury Car Tax (LCT) being applied as personal liabilities to any and all directors of the company. This is in addition to the current obligations related to Pay As you Go (PAYG) and Superannuation Guarantee Contribution (SGC) debts. The ATO will now be able to issue Director Penalty Notices (DPNs) for all of the above, essentially making directors personally responsible for the bulk of company debt.
Essentially the legislative changes are placed to encourage Australian companies to be run in a respectful manner with the interests of all parties considered, however these changes equally ensure that the buck lands directly in the directors laps - literally - unless the company is placed into liquidation.
So What Should You Do?
The general rule is to ensure you are current and compliant in reporting PAYG, Superannuation and now, GST, on time - even if the company can’t pay it. Directors will require greater awareness around their company’s GST reporting processes and have an increased understanding of the operation of the GST system as they could be at heightened risk of being held to account for errors and oversights.
Essentially Directors need to have full visibility over the financial operations of the companies they reside over as they themselves are liable for the lion's share of company debt.
How Can Keeping Company Help?
The Keeping Company team are here to provide further detailed advice around the complexities of the director penalty regime and to help ensure you and your company are compliant and provide you with the top level view of the inner machinations of your company as required. Please do not hesitate to contact us for additional information or to discuss your individual situation.
Keeping Co. is a team of experts; Cloud Accountants, Business Advisors, Finance Specialists working together to provide a complete solution for the Australian Small to Medium Business owner.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained. We are here to help, contact us today.
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For all media enquires please contact Tracy Miller, CMO, Keeping Company 0414 898 452.