Directors Penalty Notices – are you vulnerable?
‘Phoenixing’ has long been a concern in commerce with construction particularly synonymous with its use. The practice essentially is winding up a company to avoid paying creditors (including staff entitlements) whilst creating a new company in its place that continues operations. Estimated to cost the economy billions per annum, the Government has taken steps in 2019 to attempt to address the practice.
The Treasury Laws Amendment (Combatting Illegal Phoenixing) Bill 2019 were introduced to parliament in Feb/July 2019 and have tightened regulations in a number of areas. Specific laws have been introduced to stamp down on the practice and give powers to liquidators and ASIC to pursue assets where it is believed that phoenixing exists. The law also introduces restrictions on Directors backdating their resignations or ceasing to be a director if this would mean that no directors then remained. And finally, allow the taxation commissioner to estimate GST liabilities and make company directors personally liable for their companies GST liabilities.
Also importantly, new directors may be personally liable for historic GST, SGC and PAYG liabilities if they are not reported and paid within 3 months of appointment.
Don’t get caught out.
Read a detailed report here.
Alternately, a summary can be found here.