spacer
spacer
spacer
spacer



CPA LOGO
spacer
Latest News
Hot Issues
September update of latest COVID-19 initiatives.
ATO JobKeeper 2.0 guidance surfaces
Expats Return to Australia – Travel Expenses
Profession to be relied on for post-JobKeeper turnover certificates
Update of Superannuation contribution rules from July 1, 2020
Expats & COVID-19 Impacts on tax residency
Economic recovery could be slower than anticipated: RBA
High Court rules in favour of employers on personal leave accruals
JobKeeper Phase 2 - Latest Update
Payroll Tax 2020 concessions and JobKeeper
High alert issued over myGov tax time scam
Extended director penalty regime to catch out ‘zombie companies’
SG amnesty deadline - 7 September
‘Hundreds’ to be contacted in ATO early super compliance blitz
90,000 SMEs to benefit from new JobTrainer program
Work Related expenses – 2020
‘Everyone is now on notice’: ATO acquires COVID-19 data on 3m Aussies
Extra Tools & Resources for our clients.
Year End Tax Deductions – “equipment”
Home Office Claims 2020
Early release of super sees ‘high take-up’
Tax time 2020: ATO homes in on rental deduction claims
ATO announces Div 7A COVID-19 assistance
Articles archive
Quarter 2 April - June 2020
Quarter 1 January - March 2020
Quarter 4 October - December 2019
Quarter 3 July - September 2019
Quarter 2 April - June 2019
Quarter 1 January - March 2019
Quarter 4 October - December 2018
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Extended director penalty regime to catch out ‘zombie companies’

 

Directors of companies struggling through COVID-19 conditions could be at particular risk of the recently expanded director penalty notice regime, warns one tax lawyer.

 



       


Rigby Cooke Lawyers tax counsel Tamara Cardan has now warned directors of their heightened risk of personal exposure under the recent extension of the director penalty notice (DPN) regime, which kicked in at the height of the coronavirus pandemic.


Since 1 April, the DPN regime has been extended to GST, luxury car tax (LCT) and wine equalisation tax (WET) liabilities.


“The expansion of the regime to GST may catch out many more companies, in particular SMEs, which are right now simply trying to keep afloat and stay in business in these unprecedented times,” Ms Cardan told Accountants Daily.


“Directors are managing significant financial pressures, employee retention issues and a myriad of other urgent matters. In this context, it is logical that compliance with the director penalty regime is not at the forefront of people’s minds.”


With BAS lodgements for the first quarter under the extended DPN regime due soon, and the ATO eyeing a restart of its debt and lodgement intervention activities over the next couple of months, Ms Cardan believes directors need to begin being actively involved in the compliance and reporting activities of their business.


“Directors of ‘zombie companies’ will be at particular risk of exposure under the DPN regime, especially when the government’s support measures cease, and the company is not generating enough income to pay its tax debts. It is anticipated that many ‘zombie companies’ may go into administration, potentially leaving directors exposed under the DPN regime,” Ms Cardan said.


“Where a director has been issued with a DPN, placing the company into administration may actually be a way to satisfy his or her personal liability to the unpaid tax debts.


“However, this option will only be available where BAS lodgements have been made within three months of the relevant due date. If this time frame is not met and a DPN is issued, even if a company goes into administration, the director must still pay the tax debts to satisfy their personal liability.”


Ms Cardan also noted that director resignations would be ineffective in avoiding personal liability, with clients urged to engage with the ATO early to avoid tougher action down the line.


“If a director resigns from their company before a DPN is issued, the ATO may still subsequently issue a DPN to this individual. The key to mitigating personal exposure under the DPN regime is to have good internal reporting systems and timely lodgements,” she said.


“If your client’s business is experiencing financial difficulties and cannot satisfy its tax debts, I would recommend early engagement with the ATO to manage these liabilities. An open and co-operative relationship in most instances would prevent the ATO from taking stronger compliance action.”


 


 


Jotham Lian 
27 July 2020
accountantsdaily.com.au


 




17th-August-2020
spacer
Privacy Policy | Disclaimer