The Federal Government has introduced legislation designed to strengthen Director’s obligations to protect Government revenue and worker’s entitlements.
Currently, the ATO is able to issue a Director Penalty Notice to directors of a company if there are outstanding PAYG Withholding obligations for an extended period of time. This works by the ATO sending a notice to directors of a company giving them 14 days from the date of the letter to pay the outstanding amount in full or put the company in receivership/liquidation. Failure to do 1 or the other sees the director/s personally liable for the outstanding amount.
The new Bill will see the scheme extended to include employee’s superannuation guarantee entitlements (generally 9% of gross wages). Also, the requirement for the ATO to send a Director Penalty Notice will be removed and Directors will be deemed to be personally liable for outstanding PAYG Withholding (tax withheld from wages) and superannuation guarantee entitlements 3 months after the due date if the amounts are not reported to the ATO.