Directors Penalty Notice – GST
On 5 February 2020, the long-anticipated Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 become law.
The Bill focuses on stamping out phoenixing activities that costs the Australian Economy anywhere between $2.85 billion to $5.13 billion per year according to The Economic Impacts of Potential Illegal Phoenix Activity Report.
This now means:
- Directors will have a personal obligation to ensure that the companies they run either pay their GST debts otherwise, the ATO can issue a Directors Penalty Notice to make the directors personally liable for the GST, WET and LCT .
- This also extends to estimates made by the ATO for GST.
- Prevent directors from backdating their resignations and prevents directors from all resigning and leaving a company as an empty shell.
- Targets advisers, including lawyers and accountants that facilitate illegal phoenix transactions and broadens the powers of ASIC and Liquidator to combat “creditor–defeating dispositions”.
- Expand the ATO’s power to retain refunds where there are tax lodgements outstanding.