by Daniel Robert Soire
Recent Changes You Need To Be Aware Of
DPNs are issued by the ATO to directors of companies that have overdue tax debts relating to PAYG withholding, net GST and SGC obligations. The ATO must issue a DPN before it is able to pursue the directors personally for company tax debts.
The ATO has recently made a significant change to the options available for directors to address non-lockdown DPNs. The options no longer include entering a payment arrangement with the ATO. Non-lockdown DPNs are issued to company directors that have lodged its business activity statements and instalment activity statements within three months and SGC statements by the due date and remain unpaid. If a non-lockdown DPN is issued directors must do one of the following to avoid personal liability:
- Pay the company tax debts;
- Put the company into administration;
- Appoint a small business restructuring practitioner; or
- Place the company into liquidation.
A director has options to avoid a penalty if:
- The director did not take part (and it would have been unreasonable to expect the director to take part) in the management of the company during the relevant period because of illness or another acceptable reason.
- The director took all reasonable steps to ensure that, either the company paid the amount outstanding, an administrator was appointed to the company, a small business restructuring practitioner was appointed to the company, or that the directors began winding up the company.
- Where there is an unpaid SGC obligation – the company treated the Superannuation Guarantee (Administration) Act 1992 (Cth) as applying in a way that could be reasonably argued, was in accordance with the law, and took reasonable care in applying that legislation.
What To Do When Issued With a DPN
If your client receives a non-lockdown DPN – which will be sent to the director personally via the address recorded at ASIC – the director should seek specialist advice from you (their accountant or advisor) and Jones Partners immediately to understand the options available. Together we can ensure the director and the business are in the best position to protect themselves from being held personally liable.
If a director finds themselves in a position where it is difficult for the company to meet its taxation liabilities, they must act quickly to achieve a resolution, instead of waiting for a DPN to be issued and risk personal liability.
There are options and methods available to dealing with DPNs, the most important being to act quickly and ask for help.
Contact Jones Partners on 02 9251 5222. We can support you and your clients
Michael Jones, Bruce Gleeson & Daniel Soire
Managing Principals
Jones Partners Insolvency & Restructuring