Director Penalty Notice regime – GST included from 1 April 2020!


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Director Penalty Notice regime – GST included from 1 April 2020!

The Director Penalty Notice (DPN) regime has been amended to make directors of a company personally liable for specified taxation liabilities, including GST, wine equalisation tax (WET) and luxury car tax (LCT).   

These amendments provides the ability for the ATO to make estimates of the amounts outstanding if returns are not lodged.

The changes apply to tax periods from 1 April 2020, but do not apply to amounts outstanding prior to this date.

Directors are required to ensure that their company meets their GST obligations by the due date or goes promptly into voluntary administration or liquidation. If amounts remain outstanding on the due date and the company is not in liquidation or voluntary administration, a penalty arises equal to the outstanding tax amounts. The ATO cannot collect the penalty without first serving a DPN giving the director 21 days’ notice to pay the penalty or place the company into voluntary administration or liquidation. If the director does so the penalty will be remitted unless it is a lock down DPN.

A “lock-down” DPN will apply in relation to GST if a GST return is not lodged or a voluntary administrator or liquidator is not appointed, within three months of the due date. In the same way as for PAYG and Superannuation, once a DPN is locked down, the appointment of a voluntary administrator or liquidator to the company will not remit the director’s penalty.

These obligations continue to apply to directors who resign, in relation to all tax periods prior to their resignations, where there are amounts outstanding.

Obligations will be imposed on new directors 30 days after their appointment. The current defences to DPNs of:

  • illness or other good reason, or
  • that the director took all reasonable steps to comply with the obligation

have been extended to include:

  • that the company adopted a reasonably arguable position and the company took reasonable care in connection with applying the GST Act.

All of these amendments also apply to Wine Equalisation Tax (WET) and Luxury Car Tax (LCT).

The ATO have released a draft Practical Compliance Guideline (PCG 2019/D4) in relation to the making of estimates for GST, WET and LCT. The ATO expects to finalise this draft guideline now that the legislation has been passed.

If you would like to discuss this further, please contact Antony Resnick of dVT Group on 02 9633 3333, or email at mail@dvtgroup.com.au or complete our online contact form .

dVT Group is a business advisory firm that specialise in business strategy, turnaround, forensic investigations and insolvency (both corporate and personal). 

Source:  ARITA (27 February 2020) “What you need to know about the new illegal phoenixing legislation” (Schedule 3).