Directors are already currently personally liable for unpaid superannuation and withholding tax and on 5 February 2020, the Senate passed a Bill which means directors can now be personally liable for unpaid company Goods and Services Tax (GST) as well. The Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 (The Bill) is now awaiting assent.
Once Royal Assent is given, from the first day of the first quarter following Assent, directors will become personally liable for unpaid GST, Luxury Car Tax and Wine Equalisation Tax liabilities in certain circumstances.
Directors and management teams should review systems and procedures to ensure the debts are known and paid on time (including lodgement of any relevant forms) - to reduce and limit their risk.
Now would be a good time to correct any inadvertent error or known outstanding debts because if these are not corrected promptly, directors will become personally liable.
It's worth noting that the ATO can retain refunds where a taxpayer has failed to lodge a return or provide other information that may impact the amount of a refund.
Other important takeaways:
- The Bill prevents directors from improperly backdating resignations or ceasing to be a director when this would leave a company with no directors;
- The Bill provides further powers to Liquidators and ASIC to prevent the unlawful transfer of assets during illegal phoenix operations.
If any of this raises any concerns for you, make sure you seek professional advice early - so call Lee Duncan, Will Townson, Dan Perrier or Paul Ryan to talk it through. Asset protection strategies might be worth considering also. Contact the office on 07 3391 7566.