Director Warning On PAYG

Written on the 25 April 2013

If your company has fallen behind on it’s PAYG withholding tax, the Australian Taxation Office is looking very closely at you.  Not the company, but you, the Director. 

Under the Director penalty regime, Directors are personally responsible for unpaid superannuation guarantee and PAYG withholding amounts.  In addition, if a Director is personally entitled to a tax credit, the ATO may offset this credit against the company’s liability.

Last month, the ATO started contacting Directors of company’s with unpaid PAYG withholding obligations.  This is the first step in the process – voluntary compliance.  If these amounts remain unpaid for three months, the Commissioner will issue a Director’s penalty notice.  If the liability remains after 21 days, the penalty applies – even if the company is placed into administration.

If a company is experiencing difficulty paying its tax liability, it is important for the Directors to address the issue.  Often the ATO will work with a company to put in place repayment schedules.