Directors may start being held personally liable for ATO debts owed by their company from 1 April 2020. Any remnants of the corporate veil, are now well and truly gone.
When can you be held personally liable under a directors penalty notice (DPN)?
1. you incur a debt with the ATO after 1 April 2020;
2. the debt is for Super, PAYG, GST, luxury car tax (LCT) or wine equalisation tax (WET); and
3. the Company does either of the following:
(A) lodges the relevant return/BAS with the ATO, and doesn’t pay (called a non-lockdown DPN); or
(B) lodges the return/BAS more than 3 months after it is due, and doesn’t pay (called a lockdown DPN).
Non-lockdown DPN means that you are not held liable until the ATO issues you with the DPN in writing. Your options include: paying the debt or appointing an external administrator within 21 days of the notice date.
Lockdown DPN means that you are liable no matter what. Your only options are to: declare a form of personal bankruptcy or pay the debt.
Extending DPN’s to GST is massive, and will have ramifications for small business owners everywhere.
Get in touch if you have any questions or concerns.