If It’s A Super Nasty Surprise, Then It Could Be Your Fault
Any time after October 9 many company directors may get nasty surprises in the mail which could be nobody’s fault but their own.
It is from this date that the Australian Tax Office (ATO) will be posting notices to companies about unpaid superannuation obligations. From July 2012, directors became personally responsible for this debt.
From the start of the current financial year the ATO launched an education campaign related to the new law, and Macks Advisory has dispatched an article explaining these changes, who they will affect, and how.
So if you’re a business owner or managing a business and aren’t aware of directors’ latest responsibilities, then very obviously you need to know about them.
Directors of SMEs – as distinct from those of major corporations – are more likely to be targeted by the ATO.
The Notifications
The Taxation Commissioner has decided it’s now appropriate to move from what’s essentially been an educational mode to one of enforcement.
The notices about unpaid superannuation tax being sent to businesses are similar to those sent as notifications about unpaid Pay As You Go (PAYG) tax.
Currently we don’t know how many businesses will receive the new notices, but if many thousands of directors are to be surprised by them, we wouldn’t be surprised.
It’s because SMEs are more likely to have peaks and troughs in their cash flow that they’re more likely to attract the ATO’s attention, and correspondingly their directors are more likely to have issues with the new law. However, the bigger an erring company may be, particularly if it’s currently insolvent or close to it, the greater the likely weight of personal obligation on its directors and the greater the personal costs to them and their families if that company is unable to meet its unpaid superannuation tax obligation.
The Procedure
If you’re a business owner and you receive a notification from the ATO about unpaid superannuation obligations, you should as quickly as possible determine whether, in your view, the amount stated is correct and you should take professional advice about the alternatives and options available. Remember that we are willing to assist with initial advice at no cost.
Previously, company directors could be personally liable for unpaid PAYG taxes, but the new law now being enforced by the ATO extends this liability. Furthermore, former ways out of trouble for erring directors have been blocked and stricter time limits now apply for settling debt.
Henceforth the law:
- as well as extending directors’ liabilities, no longer necessarily protects the personal assets of those who put companies into administration or liquidation hoping to avoid meeting PAYG tax obligations;
- may also include spouses and other associates of directors in matters of liability;
- includes changes with retrospective effects.
