As of 1 April 2019, the Director Penalty regime changed in a small but very significant way.
Under the Director Penalty regime, directors of a company can become personally liable for certain company tax debts, including PAYG and superannuation. The ATO may issue a Director Penalty Notice in one of two forms:
- A non-lockdown DPN – which allows directors to remit the penalty within 21 days of receipt of the DPN by either paying the debt, placing the company into administration or winding up the company; or
- A lockdown DPN – the only way to remit the penalty is to pay the debt within 21 days of receipt of the DPN, and directors are not able to escape personal liability by placing the company into administration or liquidation.
Prior to the change, a non-lockdown DPN was issued in circumstances where the unpaid amount of PAYG or superannuation was reported within 3 months of the original due date. If reported more than 3 months after the due date, then a lockdown DPN would be issued by the ATO.
Now, for superannuation debts the 3 month grace period is no longer available. Non-lockdown DPNs will only be issued where the unpaid SGC obligation is reported by the due date (that is, within 28 days of the end of each quarter). If it is reported late, a lockdown DPN will be issued. The regime in respect to PAYG debts remains unchanged.
Given the potentially grave consequences for directors, it remains as important as ever to ensure all reporting obligations are up to date.
If you would like more information, or you have received a DPN, then please call us on (07) 4616 9898.
This publication has been carefully prepared, but it has been written in general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.
