A recent case from the WA District Court on director penalty notices issued by the Australian Taxation Office, shows just how unnecessarily complex DPN laws have become.
Unfortunately, in this case, it looks like the Registrar has got it wrong by ruling against the ATO.
Imagine the following:
– you take over as sole director for 6 months, after being promised there are minimal liabilities
– you realise this is a lie and place the company into external administration
– 18 months pass and the ATO issues a large number of superannuation guarantee charge assessments on the Company … these charges relate to the time before your directorship
– the ATO issues you with a director penalty notice for those charges … but curiously not the person who was a director at the time the assessments should have been done
What could you do?
Under 269-15 and 269-20, you had 30 days to: (1) pay the amount; or (2) appoint an external administrator.
The Registrar held against the ATO by saying that because the DPN was issued during the Liquidation and relates to debts incurred before your directorship, you could not have done anything to avoid the liability. Meaning, per 269-15(2)(b) as there were no reasonable steps remaining, you’re not liable.
Here are some prelim points … per 269-20(3)(a), the due dates for the assessments pre-date your directorship. Per 269-20(3)(b), you must within 30 days of the dates of assessments do either (1) or (2) above. If not, per 269-20(4) the penalty is due and payable on the 30th day. Here, you have spent 6 months as a director, which is a reasonably long time to become acquainted with the financials of the company. It is not a defence to say you didn’t know about the liability … I think this is what the Registrar missed.
Time will tell what the Court eventually says about this.
Remember if you receive a DPN, talk to your trusted advisor ASAP!