The ATO has started issuing director penalty notice letters to Directors in order to inform them of potential personal liability for unpaid company taxes.
If you have received a letter, CVW Accounting advises you to contact your accountant.
Why have I received a letter from the ATO?
Firstly, you have received a letter as a director of a company that has unpaid debts to the ATO including;
- PAYG withholding
- Superannuation guarantee charges
- GST
Secondly, the letter is your warning that if action is not taken to manage the company debt, the ATO will consider issuing a Director Penalty Notice or DPN. This notice makes the Director personally liable for the debt.
Lastly, the focus of the ATO in sending the letters is make directors aware of their obligations and personal liabilities. The ATO states there are clear pathways for directors to re-engage and work with the ATO to avoid escalation.
What do I need to do after receiving a Director penalty notice?
After receiving a DPN, you will have 21 days to either;
- pay the outstanding debt in full or
- contact the ATO about a payment plan for the debt
However, if the DPN is ignored, the ATO may take action to recover the director penalty amounts.
There are various options for directors based on individual circumstances. The ATO also understands COVID may have created added pressure for businesses as well as a tax debt. So, the important thing, according to the ATO is take action.
For assistance and advice contact your accountant or touch base with us at CVW Accounting.
Your obligations as a Director
As a company director, it’s your responsibility that company tax and superannuation is paid and reported on time. If not, the ATO can obtain overdue amounts from directors personally. This applies whether you are a current of the former company director.
For more detailed information visit the ATO website here.
You may also be interested in another CVW Accounting blog about Mandatory Director ID numbers.
