Corporate Insolvency - Director Penalty Notice

The director of a company may be issued with a Director Penalty Notice if the company has a tax debt to the ATO. The company then has a non-negotiable period of 21 days from when the notice was posted to remit the penalty. Failure to do so will result in the director being made personally liable for the outstanding debt.

The Director Penalty Notice is sent to the director's home address which the ATO obtains from ASIC. If the director has failed to update ASIC on changes to their address, he or she may well receive the notice after the 21 day period has expired.

To avoid personal liability a director must do one of the following within the 21 day period:

• Comply with the obligation to pay the relevant tax liability in full

• Appoint a voluntary administrator

• Appoint a liquidator and begin to wind up the company

In order to exercise the defence of "illness or other good reason" a director must first establish that he or she was ill or for other reasons was unable to participate in the management of the company. On top of this, the director must also establish that it would have been unreasonable for them to participate in the management of the company when the tax liabilities fell due.

If your business is anticipating a Director Penalty Notice, or has already received one, it is vital that you act immediately in order to ensure you have complied with the notice before the 21 day period has expired.  Failure to do so may result in loss of personal assets such as property and shares.

Here at The Quinn Group our team of experienced tax lawyers and accountants are able to assist you in dealing with the ATO and tax debt issues. For more information about the Directors Penalty Notice or for assistance with your PAYG liability, please contact The Quinn Group on 1300 QUINNS or submit an online enquiry here