Tag: PAYG

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Understanding Director Penalty Notices

Posted on | by Allan Hall

Navigating the ATO’s Enforcement Measures

In the complex territory of tax obligations, the Australian Taxation Office (ATO) is actively deploying Director Penalty Notices (DPN) at an average rate of 60 per day, as revealed by the ATO themselves.

A DPN does not confer liability upon directors for outstanding company debt, as directors are inherently liable by law. Rather, it serves as a formal notification that initiates a countdown, compelling directors to either remit the debt promptly or confront the ensuing consequences.

There are imperative steps for directors to take in response to a DPN:

  1. Complete business lodgements even if there is an inability to pay associated liabilities such as PAYG, GST and superannuation
  2. Ensure business address accuracy on ASIC’s register
  3. Seek advice from a liquidator if you are unable to meet the DPN amount.

Lockdown DPNs

A lockdown DPN comes into play when a company fails to lodge Business Activity Statements (BAS) and Instalment Activity Statements (IAS) within three months of the due date or Superannuation Guarantee Charge (SGC) statements within one month and 28 days after the quarter’s end to which the superannuation charge contribution relates. In such cases, directors face automatic and permanent exposure to penalties, with the sole remedy being full payment of the debt.

Non-lockdown DPNs

Conversely, a non-lockdown DPN provides directors with a 21-day window to consider options for remitting the applicable tax (penalty). The available choices include paying the debt, appointing a voluntary administrator, engaging a small business restructuring practitioner or appointing a liquidator. Failure to act within this timeframe results in the penalty becoming permanent, empowering the ATO to initiate debt recovery proceedings.

Adding a layer of complexity, the ATO now issues DPNs that break down amounts owed into lockdown (monthly unremitted amounts) and non-lockdown (monthly remitted amounts) columns.

Navigating the intricacies of DPNs can be challenging for directors, so engaging with a qualified tax advisor is crucial to gaining the necessary support and understanding:

  • Explaining the mechanics of DPNs
  • Reviewing individual circumstances to provide tailored assistance and outlining options based on unique circumstances
  • Offering support throughout the decision-making process.

In essence, understanding and responding to Director Penalty Notices requires a comprehensive approach, combining intricate tax knowledge and strategic insights, ensuring directors are well-equipped to address these ATO enforcement measures.

CONTACT ALLAN HALL BUSINESS ADVISORS

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Director penalty notices
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Director penalty notices

Posted on | by Allan Hall

ATO follow up of unmet PAYG withholding, Superannuation Guarantee Charge and GST

In March the ATO started contacting company directors to inform them about their potential personal liability for company tax debts under the Director Penalty Notice (DPN) program.

A letter is being sent to directors of companies if the company has not met their debt obligations in respect of PAYG withholding, Superannuation Guarantee Charge and GST.

Directors will be notified that the ATO is considering issuing them with a DPN, which makes them personally liable for the debts of their business if the company does not actively manage their debt.

The focus is on making directors aware of their obligations and personal liabilities, and the actions that may be taken if they don’t engage. Clear pathways will be provided to re-engage, work with the ATO and avoid escalation.

There is information on the ATO website for help with paying and support in difficult times. It is crucial that directors engage with the ATO early before any debts become unmanageable.

Directors can access the ATO’s payment plan estimator to work out an affordable plan.

Generally, while there is a debt, general interest charges continue to apply so make sure all lodgments are bought up to date to avoid further penalties.

CONTACT ALLAN HALL