spacer
spacer
spacer
spacer



CPA LOGO
spacer
Latest News
Hot Issues
ATO hit list 2025 – Key Areas Under Review
Why Succession Planning Matters for Privately Owned and Wealth Groups in Australia
Benefits of a business plan
Roles and Responsibilities in a Business Partnership
Mixing business and pleasure? Be vigilant this tax season
30 June 2025 - Tax Checklist - Small (and Micro) Business
3 more GST fraudsters sentenced under ATO’s Operation Protego
Evolution of Boeing - 1916 - 2025
ATO - Targeted Areas of Focus 2024-25
6 ways to improve your business plan
Benchmarks for small business
Beware the early lodgment tax trap, CPA Australia warns
Tax lawyer flags compliance traps with family trusts
Superannuation on paid parental leave from 1 July 2025
Tax Time Checklists Individuals; Company; Trust; Partnership; and Super Funds
Comparison of various Animal Weights
2025 Tax Planning Guide Part 2
From 1 July 2025 ATO Interest is no longer tax deductible
SME confidence and conditions see uptick over Q1 2025, survey reveals
Depreciation expert urges property investors to leverage tax depreciation
Buy a business
Upskilling and self-education costs
How secure is your super account?
Freshwater Resources by Country 2025
Why Might a Lease Dispute Occur?
$20,000 instant asset write-off
2025 Tax Planning Guide Part 1
New Bunnings scam warning
The Largest Empires in the World's History
Articles archive
Quarter 1 January - March 2025
Quarter 4 October - December 2024
Quarter 3 July - September 2024
Quarter 2 April - June 2024
Quarter 1 January - March 2024
Quarter 4 October - December 2023
Quarter 3 July - September 2023
Quarter 2 April - June 2023
Quarter 1 January - March 2023
Quarter 4 October - December 2022
Quarter 3 July - September 2022
Quarter 2 April - June 2022
Quarter 1 January - March 2022
Quarter 4 October - December 2021
Quarter 3 July - September 2021
Quarter 2 April - June 2021
Quarter 1 January - March 2021
Quarter 4 October - December 2020
Quarter 3 July - September 2020
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
Proposal to hold directors liable for GST set to pierce corporate veil

The proposed extension of the director penalty regime to GST liabilities could spell the end of the corporate veil for small to medium enterprise directors, says an insolvency specialist.



         

 

 

With the reintroduction of Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 last month, the commissioner could soon be allowed to collect estimates of anticipated GST liabilities and make company directors personally liable for their company’s GST liabilities.

 

This follows on from the current director penalty regime which makes directors personally liable for PAYG withholding amounts and SGC obligations.

 

Speaking with Accountants Daily, Worrells Solvency and Forensic Accountants partner Stephen Hundy said that with many SME directors providing personal guarantees for a company’s obligations, the latest proposal to extend director penalty notices to GST could potentially see the end of the corporate veil.

 

“With a large number of SME companies we deal with, the directors have exposed themselves personally for their company’s debts due to the large number of personal guarantees provided,” Mr Hundy said.

 

“Together with the ATO’s power to issue DPNs in respect of unpaid PAYG withholding tax and superannuation guarantee charge (SGC), this can mean in some cases that an SME director may be personally exposed for a large majority of the debts of their company. 

 

“In many cases, the directors have no choice but to provide personal guarantees in order to obtain credit from financiers and suppliers. In a lot of cases, however, we find that directors do not know what they have personally guaranteed and also they are unaware that they are personally liable for PAYG withholding tax and SGC,” he added.

 

“With tax debts, we see the majority of debt owed to the ATO comprising PAYG withholding tax and GST. At present, a DPN cannot be issued in respect of unpaid GST; however, if the director penalty regime is extended as proposed to include GST, this will increase the extent to which directors’ assets may be at risk in the event of an insolvency.”

 

While the bill has not yet passed, Mr Hundy believes accountants should remind their clients of their various obligations and the prospect of having GST added to that list of liabilities.

 

“Advisers and accountants should ensure that their director clients are aware of what they are guaranteeing and also that they are liable for PAYG withholding tax and SGC. In respect of taxation lodgements, it is advisable to lodge these with the ATO even if the associated debt cannot be paid, as this may offer some protection in the future if things go awry,” Mr Hundy said.

 

“New company directors should always conduct some due diligence in respect of a company’s unpaid statutory obligations before consenting to be appointed; otherwise, they may find themselves personally liable for past company debts. Conversely, exiting directors should ensure that they are released from any personal guarantees which they may have provided for a company’s obligations.

 

“As always, seeking advice early is the key when things get tough. This not only applies to directors but to advisers and accountants, who should seek out specialist advice at the earliest opportunity to enhance the prospects of their client avoiding insolvency.”

 

 

 

Jotham Lian 
14 August 2019 
accountantsdaily.com.au

 



13th-September-2019
spacer
Privacy Policy | Disclaimer