By Michael Fetter

24 July 2018

If you are a company director, the Federal Government is introducing tougher personal liability measures as part of a new director penalty regime.
You have been warned.

In essence, the legislation broadens director liabilities to now include GST, luxury car taxes and wine equalisation taxes. It will also make company directors personally liable to the ATO in certain circumstances for their organisation’s debts in those areas and others.

This is in addition to PAYG and Superannuation Guarantee Charge liabilities. Directors are obligated to pay correct amounts and on time. These were brought in some time ago and are liabilities directors will face if their companies or organisations fail to comply.

This means it is imperative company directors pay close attention to many factors, including but not limited to the following:

  • How data is collected,
  • Company cash flow,
  • How their business activities statements are prepared and
  • An understanding of general financial health of the company’s GST liabilities and payments.

 

Directors need to understand their potential exposure to personal liability. One way to do this is to establish a system of internal controls and measures to manage and maintain compliance. In addition to refining internal management, this will provide a level of personal comfort for any director.

Directors of large organisations should be particularly wary of the introduction of liability for GST. This imposes extremely high amounts of personal liability upon directors if taxes are not paid on time and properly. Directors will also be personally liable (likely jointly and severally) for any illegal or fraudulent GST activity liability of their employees and managers.

The reasoning behind the new legislation is the ATO has fallen victim to directors who deliberately put companies into liquidation prior to remitting GST.

Also, we note that the government has flagged the introduction of a new director identification number system. This will see directors allocated an unique identification number (DIN) to protect Australian businesses from directors who are looking to avoid responsibilities. As a result, government agencies (such as the ATO and ASIC) will be able to keep a watchful eye on particular movements by directors.

Whilst only a small percentage of directors deliberately set out to defraud the ATO, the impact on the economy and on trust is significant.

It is prudent that directors come and see us to get your affairs in order, for asset protection and to control and for compliance measures.

 

Please see us for a health check. Feel free to call Michael Fetter, Phillip Leaman or Felicity Simpson to discuss further.

Related Articles

View All
Leasing & Lease Disputes / Real Estate Agents / Commercial Law

COVID-19 – Commercial Tenancy Relief Scheme to be extended (again)

The CTRS was initially expected to end on 29 September 2020 under the COVID-19 Omnibus (Emergency Measures)(Commercial...
Read More
Commercial Law

Verification of online customers: Is your business complying with the new AML/KYC laws?

The changes apply to any business receiving funds from customers that are not already known to them This includes...
Read More
Retail Clients & Chains / Commercial Law

A win for the Tigers on the field and in the Court of Appeal

On 16 October 2020 the Court of Appeal confirmed that a ‘retail premises lease’ will remain subject to the Retail...
Read More
Commercial Law / Leasing & Lease Disputes

COVID-19 Lease Variations- How to document it properly

We have written several blogs about commercial leases and licences and the impact COVID-19 has had on them and what the...
Read More
Commercial Law / Commercial Contracts & Agreements / Corporate Advisory and M&A

Announcing our Promotions

Rob joined us in 2017 and immediately impressed us with his litigation skills and incredible work ethic It’s no...
Read More
Commercial Contracts & Agreements / Commercial Law

When contracts end: The perils of miscommunication and misunderstanding

From a practical perspective, the most critical thing for any party to a contract to appreciate is the importance of...
Read More
Commercial Law / Mortgages, Loans & Finance / Mezzanine Finance

Private lending: the red flags

Today, it may appear amicable and you do not foresee anything going wrong after the money is advanced Surely, it’s...
Read More
Commercial Law / Commercial Contracts & Agreements / Corporate Advisory and M&A

Negotiating Indemnities: Some Practical Tips

An appropriate indemnity can provide a valuable mechanism for risk allocation between parties to commercial dealings...
Read More
Commercial Law / Property & Development / Developments

TLFC Law Triple Finalists in the Lawyers Weekly Australian Law Awards 2019

Celebrating its 19th year, the Australian Law Awards, in partnership with UNSW Law, is the pinnacle of award programs...
Read More
Commercial Law / Franchising & Licensing / Real Estate Agents

Thinking of buying or selling a Rent Roll?

However, rent rolls are regulated by the Estate Agent’s Act and it is important that the contract to buy or sell the...
Read More
Information Technology & Innovation / Developments / Commercial Law

Cyber Security and Protection from Cyber Fraud

Email communication is an inherent part of modern day business It is not uncommon to run an entire transaction online,...
Read More
Employment Law / Commercial Law / Litigation & Dispute Resolution

What employers need to know when letting someone go

A staff member may need to be let go because the business can no longer afford them, or perhaps they are just not...
Read More