ATO Changes to Director Penalty Laws

On 29 June 2012, changes were made to the tax laws to reduce the scope for companies to engage in fraudulent phoenix activity or to escape liabilities and payments of employee entitlements.

"Phoenix" activity is typically associated with directors who transfer the assets of an indebted company into a new company of which they are also directors. The director then places the initial company into administration or liquidation with no assets to pay creditors, meanwhile continuing the business using the new company structure.

By introducing further disincentives for companies to avoid their tax law and employee obligations, these changes are intended to deter directors from engaging in fraudulent phoenix activities and to improve the regulatory environment for businesses that comply with the tax law.

The changes protect worker's entitlements and strengthen director's obligations by:
  • extending the director penalty regime and the estimates regime to apply to unpaid superannuation guarantee charge
  • ensuring that directors cannot discharge their director penalties by placing their company into administration or liquidation when pay as you go withholding (PAYG withholding) or superannuation guarantee charge remains unpaid and unreported three months after the due date
  • in some instances, making directors and their associates liable to PAYG withholding non-compliance tax (NCT), a tax equivalent to reducing PAYG credit entitlements where the company has failed to pay amounts withheld to the Commissioner.
See also ==> ATO Director Penalties
See these posts with tips, calculators and checklists to help you prepare your eTax Return (and get a better refund) with less hassle - checklist of eTax and Assessable Income and deductions and checklist of eTax and Allowable Deductions.

 For help with your eTax return see our eTax Return Checklist.

Web Based Tax Return App:

A benefit of using eZtax, our web based tax return app, is we have the genuine online tools, knowledge and experience to get the best tax refund for our clients, making it easy to complete your annual tax return online.

Our Web Based Tax Return App will step you through all the necessary questions to increase your 2014 tax refund estimate and take into account all relevant tax deductions and tax offsets. Try it now. Its FREE to get started! 

Copyright 2014. My Tax Zone.