There appears to be no doubt that the ATO has toughened their stance on outstanding tax debts. Despite the generosity of the ATO with negotiating payment arrangements during the so called 'GFC', there has recently been a spike in the number of director penalty notices being issued by the ATO.
Director Penalty Notices make directors of a company personally liable for certain tax debts of the company. With many businesses yet to recover from the economic slowdown, it is common for an entity to have overdue obligations with the ATO.
With this in mind, we suggest the following:
1. Do not bury your head in the sand:
If you have outstanding commitments with the ATO, do not bury your head in the sand. Nothing seems to aggravate the ATO more than not responding or not communicating with them about the outstanding debt.
2. Keep on top of existing payment plans:
If you already have payment plans in place with the ATO, you must meet all components of the agreed payment plan. This usually includes keeping up to date with all future commitments in addition to the payment plan amounts. If for whatever reason you cannot meet the agreed payment plan amounts, talk to the ATO in advance. Do not default and give the ATO an excuse to issue director penalty notices.
3. Consider your role as a director:
If you are a director of a company and you do not have a clear understanding of its financial position, you need to consider your role as a director of that company. You should also consider whether any director appointments are surplus to your needs. For example, you may not need to have both the husband and wife as directors of your company.
4. Confirm your outstanding ATO obligations:
As a director of any company you need to clearly understand the quantum of any outstanding commitments to the ATO. This includes the terms of any existing payment arrangements, any additional amounts owing to the ATO and future obligations that may arise from overdue lodgements.
5. Get help:
If you are in trouble and cannot meet your ATO commitments, get help from your advisor.
If you have any questions, or would like to discuss your specific circumstances, please do not hesitate to call us.