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Director Penalty Notices for GST coming 1 April 2020

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The Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 was passed by the Senate last night. This means (among other things) the ATO’s Director Penalty Notice Regime will be expanded to include GST starting 1 April 2020.

A Director Penalty Notice is a Notice that the Australian Tax Office (“ATO“) can send to a director that can make that director personally liable for, currently, two types of tax debts of a company – Pay As You Go (“PAYG“) and Superannuation Guarantee Charge (“SGC“) liabilities. The addition of Goods and Services Tax (“GST”) to this list means the ATO will be able to pursue a company director personally for the majority of a company’s tax debt.

The now-approved bill makes the new powers to pursue GST forward reaching only – so historical debts will not be affected. A GST debt incurred in the period starting 1 April 2020 can be pursued with a Director Penalty Notice

The bill also imposes the same 3-month lockdown rules that currently apply to PAYG to GST as well.

The current lockdown rules state that if PAYG was reported more than 3 months after the due reporting date (or not at all) then the DPN is “Locked Down” which means placing the company into Administration or Liquidation will not remove the penalty.

So What Should You Do?

The general rule is to make sure you report PAYG, Super and now GST on time, even if the company can’t pay it.

If your client has received a DPN, call us for a free appraisal of your options. Send us a copy of the notice and our advisors will walk you through step by step what each part means. Act Fast! If you have a DPN the clock is ticking!

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