The essential changes are:
- Directors and penalties extended to unpaid superannuation guarantee payments as well as unpaid PAYG amounts;
- Directors are no longer able to discharge or extinguish a Director Penalty by placing a company into administration or liquidation when PAYG or superannuation guarantee payments remain unpaid and unreported 3 months after the due date;
- Directors and their associates will be liable to pay PAYG withholding non-compliance tax in certain cases (effectively reducing credit entitlements) where the company has failed to remit amounts withheld, that is, directors and associates will not be able to assess PAYG credit in their own tax returns where a company has not paid the ATO;
- Amendments are retrospective to the extent that any unpaid and unreported (for more than 3 months) PAYG liability outstanding at 29 June 2012 will automatically result in a director penalty that cannot be remitted by placing the company into liquidation.
Thus, where there are outstanding BAS lodgments more than 3 months past due and the ATO issues a Director Penalty Notice, the usual method of placing a company into liquidation or voluntary administration to avoid personal liability for a company tax debt is no longer available.
Therefore, a Director in this situation will be held personally liable for the tax debt and will have no basis to escape personal liability unless he or she can establish:
- Because of illness or for some other good reason, the director was not involved in the management of the company and it was reasonable for the director not to be involved;
- The director took all reasonable steps to ensure the directors cause 1 of 3 things to happen (or no such steps were available)
a) The company to meet its obligation to pay;
b) An administrator of the company to be appointed; or
c) The company to begin to be wound up.
3. There were no reasonable steps that could have been taken to ensure any of the above things happen. In this regard, the Commissioner must have regard to all the relevant circumstances, including when, and for how long, the director was a director and took part in the management of the company.