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The ATO is chasing directors for missed payments, tax or employee debt. Discover what all directors need to know.

The ATO is chasing directors for missed payments, tax or employee debt. Discover what all directors need to know.

by | Oct 3, 2022 | Law Changes, Taxation | 0 comments

We all have things in our life that we don’t want to deal with. So we put them off for as long as possible. But when it comes to the ATO, never put off dealing with them – especially now that their pandemic leniency is over.

We are seeing the Tax Department contacting many business owners for missed payments, tax debt or both. The trouble is, if you don’t deal with the situation promptly, you will probably incur greater debt from penalties and interest charges.

Company directors are at risk

Under the law, directors are responsible for ensuring a company’s tax and super obligations (such as GST, PAYGW and SGC) are reported and paid on time. If a company fails to meet its payment obligations, the directors become personally liable for the debt. Past, present and new directors can all be considered liable.

Once the debt has been identified by the ATO, every director of the company will be issued a Director Penalty Notice. If you receive this notice, act promptly because procrastination could lead to the ATO forcing you to sell assets to cover the payments. Generally, you only have 21 days to respond.

It’s not all doom and gloom

For those directors who act promptly, there may be options. So don’t think liquidation or declaring bankruptcy are your only choices if your tax debt is significant. In some situations, the ATO will consider payment arrangements where you guarantee you will pay set amounts over a specific period of time. Restructuring your business to legitimately reduce the debt may also be possible.

If you receive a Director Penalty Notice or correspondence from the ATO, your first step should be to clarify how much you owe. You can do this yourself by calling the ATO or if you have a good, proactive accountant, you can ask them to find out for you.

The second step is to check the mailing address for all directors is up-to-date and accurate with both the ATO and the ABR (Australian Business Register). This will ensure every director receives correspondence relating to the company’s debt.

We’re here to help too

We understand that to maintain cash flow, sometimes businesses delay making their SGC, GST or PAYGW payments. But the ATO has little tolerance for this.

If you are experiencing financial hardship, act promptly because there are always options. But these options need time to implement, so don’t wait until the last minute.

If you lack confidence in your accountant’s ability to act quickly on your behalf, and you don’t want to deal with the ATO yourself, get in touch with us by calling 02 4713 1100. We have lots of ways we can help you manage your business debt.

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