Latest Accounting News
Hot Issues
COVID-19 resources -Update July 2020
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
‘HomeBuilder’ grants now available.
$150k instant asset write-off extended for 6 months
JobKeeper documentation ‘absolutely critical’ in ATO audit
Tax Time Checklists - Individuals; Company; Trust; Partnership; and Super Funds
ATO updates JobKeeper compliance approach
COVID-19 hotspots - tax time 2020
Tax reform to feature heavily in PM’s JobMaker plan
Jobkeeper Fraud warning
ATO extends initial JobKeeper payment deadline
Boosting cash flow - ATO
Our website, your resources
ATO releases JobKeeper alternative test
Temporary Working from Home Expenses Rule
Minimum Pensions Halved – 2020 & 2021
More coronavirus support for landlords, commercial tenants
COVID-19: Early Childhood Education and Care Relief Package
What Covid-19 relief packages mean to you.
Now I’m working from home, what can I claim?
Global statistics plus Covid-19 updates
ATO clarifies COVID-19 rent relief concerns
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
Quarter 3 July - September 2014
Quarter 2 April - June 2014
Quarter 1 January - March 2014
Quarter 4 October - December 2013
Quarter 3 July - September 2013
Quarter 2 April - June 2013
Quarter 1 January - March 2013
Quarter 4 October - December 2012
Quarter 3 July - September 2012
Quarter 2 April - June 2012
Quarter 1 January - March 2012
Quarter 4 October - December 2011
Quarter 3 July - September 2011
Quarter 2 April - June 2011
Quarter 1 January - March 2011
Quarter 4 October - December 2010
Quarter 3 July - September 2010
Quarter 2 April - June 2010
Quarter 1 January - March 2010
Quarter 4 October - December 2009
Quarter 3 July - September 2009
Quarter 2 April - June 2009
Quarter 1 January - March 2009
Quarter 4 October - December 2008
Quarter 3 July - September 2008
Quarter 2 April - June 2008
Quarter 1 January - March 2008
Quarter 2 April - June 2007
Quarter 2 April - June 2006
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