The ATO may issue the director of a company with a Director Penalty Notice (DPN) if the company has a tax debt to the ATO. The company then has a non-negotiable time frame of 21 days from when the notice was posted to pay the penalty. Failure to do so will result in the director being made personally liable for the outstanding debt to the ATO.
A Director Penalty Notice (DPN) is sent to the director’s residential address which the ATO obtains from ASIC records. If the director has failed to update ASIC on changes to their address, he or she may well receive the notice after the 21 day period has expired.
To avoid personal liability a director must do one of the following within the 21 day time period:
• Comply with the obligation to pay the relevant tax liability in full
• Appoint a voluntary administrator
• Appoint a liquidator and begin to wind up the company
The DPN clearly states the exact dollar amount of the tax debt owed by the director’s company. If you are a director it is important to be aware that if you receive a Director Penalty Notice and do not undertake one of the three options within the 21 days allocated, you can become personally liable for the tax debt of the company. Essentially this means that the ATO can then commence action against you rather than the company to collect the outstanding debt.
If your business has a tax debt or you have received a Director Penalty Notice it is vital that you seek professional advice quickly!
There can be significant ramifications for not complying with the ATO’s notice, this can include losing personal assets such as cars, property or shares. Here at The Quinn Group our team of Tax Lawyers and Tax Accountants are experienced in dealing with the ATO and tax debt issues. For more information on the changes to Director Penalty Notices or about other tax debts submit an online enquiry. Alternatively, call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to book an appointment today.