Company directors are responsible for ensuring their company's tax and super obligations are reported and paid on time.
If your company has an overdue debt with the Australian Taxation Office (ATO) and doesn’t pay the amount owing or contact the ATO to make other arrangements, the ATO may issue a Director Penalty Notice (DPN).
When is a director issued a DPN?
DPNs are issued to current directors and anyone who was a director at the time the company failed to pay. They make the director personally liable if a company has failed to meet its pay-as-you-go withholding, goods and services tax and superannuation guarantee charge obligations.
The ATO is progressively writing to the directors of companies that have an overdue debts with them. If you receive a letter, or your company has a debt with the ATO, you need to arrange to pay the overdue amount or enter into a payment plan.
Related: ATO Cracking Down on Director Penalty Notices for late payment of Employer Obligations
The ATO is very open to setting up a payment plan with you, providing that the tax debt isn’t overdue yet. Your previous history will also be taken into consideration when agreeing to a payment plan.
The key is to ensure that even if you can’t pay on time that you still lodge your BAS (business activity statements) or tax returns on time. This demonstrates to the ATO that you are aware of your obligations and doing your best to meet them.
Alternatively, your tax specialist can request a payment plan on your behalf, so if in doubt about what you are required to do we recommend speaking to one of our tax specialists.
Have you noticed our #FridayExpertTips... here's one that relates to Taxation
“Superannuation: Make sure any contributions you make are within the contribution caps, so you don’t pay a penalty tax."