Director Penalty Regime For GST

Currently, the director penalty regime makes the directors of a company personally liable for their company’s:

  • Pay as you go (PAYG) withholding obligations; and
  • Superannuation guarantee contribution (SGC) obligations.

Legislation has been introduced into parliament on 4 July 2019 with new provisions that enable the ATO to seek recovery of unpaid GST of a company from its directors.

For un-lodged Activity Statements, the proposed changes will allow the ATO to estimate the entity’s GST and require the amount to be paid within 21 days otherwise the director will become personally liable.

This means that the ATO can take enforcement action against the director personally where SGC, PAYG(W) and GST is unpaid, including garnishee notices and bankruptcy proceedings.

Recommended action

With the extension to the director penalty regime to be introduced from 1 October 2019, directors should ensure now that they:

  • Are aware of the GST affairs of their company
  • Identify any potential risks or exposure
  • Ensure that the company has adequate controls around its GST accounting and BAS preparation processes
  • Are aware of any un-lodged Activity Statements
  • Assess who is the most appropriate person to be the director

If you have any further questions or would like further details about a GST or risk review and its benefits, please do not hesitate to contact Bjorn Kirberg our Senior Tax Advisor or your Harris Black team member.

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.

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