First there were the 2019 Black Summer bushfires and then Covid which led the Australian Tax Office to give across the board leniency for tax debt. But all that’s behind us now and the ATO is actively pursuing tax debt in all forms.
If you are a director of a company, you can be personally liable for any unpaid taxes incurred by the company. These include:
- PAYGW – Pay As You Go Withholding
- SGC – Super Guarantee Charges
- GST
To recover the unpaid taxes, the ATO will issue a DPN (Director Penalty Notice) that will set out the unpaid tax amounts. If you receive a DPN, you need to take immediate action and treat the issue very seriously because the Tax Office can use a director’s personal assets to recover unpaid company taxes.
If you receive a DPN, one of the best actions you can take is to get in touch with us because there are things you can do. For instance:
- You can immediately pay the tax debt in full or we can help you develop a payment arrangement plan to submit to the ATO
- We can assist you with engaging a restructuring practitioner to help you legally reduce your tax debt and keep trading
- You may prefer to voluntarily appoint an administrator for the company and we can help you evaluate if this is an appropriate course of action
- Or, after evaluating all of your options, you may decide to cease operations and we can assist you with this option as well
It helps to be proactive!
Director Penalty Notices are sent when the ATO is serious about chasing the debt your company has incurred. But the Tax Office is far more lenient if you take a proactive approach by admitting your company has unpaid tax debts and would like to implement a payment arrangement.
To get approved, your payment arrangement needs to set out:
- How much money will be paid – often starting with an upfront lump sum followed by other specified payments
- Where the money is coming from e.g. the sale of your personal and/or company assets, business revenue
- How long it will take you and the company to repay the company’s tax debt in full
As your accountants, one of our roles is to help you:
- Legitimately minimise your tax obligations
- Remain compliant by paying your taxes on time
- And if you get into financial difficulties, we’re also here to help you
If you have received a Director Penalty Notice or are concerned about your company’s tax burden, get in touch with us. We’re here to help you.
