Directors’ Personal Liability Extended to Include Companies’ GST Liabilities

Treasury Law Amendments (Combating Illegal Phoenixing) Act 2020 extends the director penalty regime to make the directors of a company personally liable for the company’s unpaid GST, in some circumstances. The Act also enables the Australian Taxation Office (ATO) to estimate unpaid amounts of certain liabilities, and to recover the amount of the estimates.

Before the recent changes were enacted, directors of a company could only be held personally liable for unpaid Pay As You Go (PAYG) Withholding and superannuation guarantee charge liabilities.

The changes apply prospectively in relation to assessed liabilities that arise in tax periods commencing on or after 1 April 2020. They may also apply retrospectively to a previous tax period where, on or after 1 April 2020, the ATO makes an estimate of a net amount of GST relating to a previous tax period.

More than ever, it is critical that you lodge your activity statements on time.