As a company director, you carry a weighty responsibility – ensuring that your company meets its tax and superannuation obligations in a timely manner. However, despite your best efforts, circumstances may arise where these obligations are not met, leaving you vulnerable to Director Penalty Notices (DPNs) issued by the Australian Taxation Office (ATO).
In this article, we’ll explore the nuances between lockdown and non-lockdown DPNs, and shed light on how you can navigate these challenges with informed decision-making and strategic support.
The Director Penalty Regime: An Overview
Under the director penalty regime, directors can be held personally liable for certain company debts, including Pay As You Go Withholding (PAYGW), Goods and Services Tax (GST), and Superannuation Guarantee Charge (SGC).
A director becomes liable for a penalty at the end of the day on which the company is due to meet its obligation, with the penalty being created automatically by law.
Non-Lockdown DPN: Understanding Your Options
A non-lockdown DPN can be issued when a company has lodged its business activity statements and/or superannuation guarantee charge statements within three months of the due date for lodgement, yet the debts remain unpaid.
In such cases, directors are given 21 days to take action, including paying the debt in full, or appointing a Voluntary Administrator, Small Business Restructuring Practitioner, or Liquidator over the company.
It’s crucial to note that entering into a payment plan with the ATO within this period does not absolve directors of personal liability; the entire debt becomes their responsibility after the 21-day window.
Lockdown DPN: Permanently Locked In
In contrast, a lockdown DPN is issued when a company fails to lodge its statements within the specified timeframe. Once issued, this penalty permanently locks down on the director, with no opportunity for remittance except by paying the debt in full.
This stringent measure underscores the importance of meeting lodgement deadlines to avoid dire consequences.
The Increasing Utilisation of DPNs by the ATO
With the ATO ramping up its efforts to recover overdue small business tax – aiming for a staggering $30 billion – the utilisation of DPNs is expected to rise. Furthermore, recent instances have revealed that lockdown DPNs may be issued even after a company undergoes liquidation or appoints insolvency practitioners, catching many directors off guard.
Navigating the Terrain: Seeking Specialist Advice
In light of these complexities, it’s imperative for directors to understand their obligations and seek specialist advice to mitigate risks. With only a brief 21-day window to address non-lockdown DPNs, strategic planning is essential.
Unlocking Solutions with APICKLE
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Conclusion: Empowering Informed Decision-Making
In the realm of director penalty notices, knowledge is power.
By understanding the distinctions between lockdown and non-lockdown DPNs and seeking expert guidance, directors can safeguard their interests and make informed decisions.
Remember, staying informed, proactive, and seeking specialist support are key to navigating the complexities of director penalty notices effectively.
