The Directors Penalty Notice will cause distress for many business owners facing tax debts with the Australian Taxation Office. A director’s tax liability will be imposed causing business owners to assume responsibility of unpaid tax (PAYG withholding provisions).

Division 9 of Part VI of the Income Tax Assessment Act 1997 (ITAA) now imposes a duty on the directors to become liable for their company’s outstanding tax (PAYG withholding) deductions. This director’s tax liability is a result of the company failing to remit deduction by the due date resulting in a penalty equal to the owed amount.

Whereby company directors were once isolated from company tax debts, recent ATO amendments to Part B of The Collection of Taxation Debts alter the personal liabilities of company directors as of March 2nd 2011.

The ATO is seen as an easy creditor, common across insolvent estates where repayment was often delayed, sometimes without penalty. As a result tax debts were last to be paid and could become a substantial creditor for many companies.

With the recent tax changes the Commissioner for Taxation serves the director of a company with a Directors Penalty Notice which must be acted upon within 14 days in order to avoid assuming full liability for the tax debt.

If you have a Directors Penalty Notice contact us on 1300 60 70 60 immediately to find out what options are available to you.