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Directors’ Personal Liability for Company PAYG and Superannuation Obligations

On 29 June 2012 the Tax Laws Amendment (2012 Measures No. 2) Act 2012 received royal assent. The legislation has been introduced to expand the director penalty regime; making directors now personally liable for their company’s unpaid superannuation guarantee amounts in addition to unpaid Pay As You Go (“PAYG”) withholding tax obligations. In addition, the legislation removes the ability for directors to discharge their director penalties by placing their company into administration or liquidation where unpaid PAYG withholding or superannuation guarantee amounts remain unpaid and unreported three months after their due date. 

Written by

Rod Lindquist,

Ben Williams,
Senior Associate
View profile

Under the former director penalty regime, directors were personally liable for their company’s unpaid PAYG withholding amounts. However before commencing proceedings to recover that liability, the Commissioner of Taxation (“the Commissioner”) was required to first issue a director penalty notice. Only after 21 days had passed from the issuing of that notice could the Commissioner commence proceedings against the director for the recovery of the liability. This gave directors the opportunity to have the liability remitted if, within 21 days of receiving a director penalty notice (or before receiving the notice), any of the following things happened:
  • The company complied with its obligation;
  • An administrator of the company was appointed; or
  • The company began to be wound up.
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