As of 29 June 2012 directors may now be personally
liable for their company's unpaid pay as you go (PAYG),
withholding tax and superannuation guarantee
1. Changes to the Director Penalty Regime
Directors penalties are now extendedto unpaid PAYG and
Directors can no longer discharge adirector penalty by placing
the company into administration or liquidation when PAYG or
superannuation guarantee amounts are unpaid and unreported three
(3)months after the due date;
In some instances, directors and theirassociates may be liable
for a PAYG withholding non-compliance tax where the company has
failed to pay amounts withheld to the Commissioner.
Impact on Spouses and Relatives associated with the
An associate as defined under the Income Tax Assessment Act
includes relatives, partners, a spouse and children of the natural
For an associate to be personally liable for unpaid PAYG
withholding non-compliance tax, the Commissioner must be satisfied
The associate has a credit that is attributable to an amount
withheld from a payment made to the associate by the company;
The associate knew, or could have reasonably be expected to
have known, that the company was withholding amounts payable, in
light of their relationship with the director or the company.
Obligations on Associated Person
In addition, associated persons to the directors or the company
are obligated to take positive steps to report their spouse or
relative to the relevant authorities such as the Minister, police,
and regulatory bodies including the Australian Securities and
Investment Commission (ASIC) of any amount withheld by the company
that is payable to the Commissioner.
How the New Regime Works
We note that a Director Penalty Notice (DPN) will be issued
before a director or associated person is found to be personally
liable and if the company is placed into liquidation before the DPN
expires then personal liability will be avoided. However, where
three months have lapsed after the due date and there is an unpaid
liability the director's penalty cannot be avoided by placing
the company into administration.
What You Should Do
Make sure you have all outstanding returns (including
Superannuation Guarantee Statements) up to date; and
Keep returns up to date – ensuring they are lodged within
three (3) months of the due date.
Ranked No 1 - Australia's fastest growing law firm'
(Legal Partnership Survey, The Australian July 2010)
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).