What’s Mine is Yours: When Company Tax Debts Become Your Liability
In a stark contrast to the relaxed approach taken during COVID-19, the Australian Taxation Office (“ATO”) are now aggressively pursuing the collection of billions of dollars in tax debt owed by small and large companies. One of the main methods being deployed by the ATO to collect company taxes is the issuing of director penalty notices (“DPN”).
What is a DPN?
As a director of a company, you are personally liable for a penalty equal to certain of your company’s unpaid taxes, including:
- Pay as you go withholding (“PAYGW”);
- Goods and services tax (“GST”); and
- Super guarantee charge (“SGC”).
A director’s liability in relation to unpaid company taxes is referred to as a director penalty. When the ATO is attempting to recover company taxes from a director personally, they will give the director a DPN that outlines the penalty amount and how the penalty can be remitted. If the director does not take action to cause the company to pay its debt within 21 days, the ATO can sue the director to recover the penalty amount directly from the director’s personal assets. [...]
