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19 Apr 12 Director penalty regime – proposed amendments

On 18 April 2012 the Assistant Treasurer released for public consultation an exposure draft of legislation which proposes to amend the tax law to better protect workers’ entitlements to superannuation and strengthen director obligations. The main aspects of these amendments involve:

  • expanding the director penalty regime to superannuation guarantee amounts
  • ensuring that directors cannot have their director penalties remitted by placing their company into administration or liquidation when unpaid Pay As You Go (PAYG) withholding or superannuation guarantee amounts remain unpaid three months after the due date, and
  • restricting access to PAYG withholding credits for company directors and their associates where the company has failed to pay withheld amounts to the Commissioner.

This exposure draft contains some important changes from the provisions that the government withdrew from Parliament in November 2011 so that it could conduct further consultation with industry. Following this consultation, the government has made amendments to the draft Bill, including to ensure that new directors have time to familiarise themselves with corporate accounts before being held personally liable for corporate debts, and requiring the ATO to serve director penalty notices on directors in all cases before commencing action. The draft legislation also includes a new defence for directors liable to penalties for superannuation debts where, broadly, they reasonably thought the worker was a contractor and not an employee. The changes made as a result of those consultations are set out in a summary document.

Interested parties are invited to comment on the consultation papers. The closing date for submissions is Wednesday, 2 May 2012.

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