Directors of a company are usually not personally liable for the company’s activities and debts however, there are exceptions.  A common example is where a company doesn‘t pay its PAYG, GST and Superannuation Guarantee Charge liabilities.

In these circumstances a Director penalty notice can be issued by the ATO, with only limited options available to that Director to avoid the personal penalty.

Where the company has reported the outstanding amounts within three months of the due date, there are more options available.  In these circumstances the company will need to undertake one of the options available within 21 days of the ATO issuing a directors penalty notice, otherwise the ATO can commence proceedings to recover the amount from the director personally.

Where the company has not reported the outstanding amounts by the due date the only option to available to the Director pay the debt in full.

With this in mind, where a business is unable to pay these amounts as they fall due, they should at least lodge the forms by their due date and contact the ATO to discuss serviceable payment arrangements.

Contributed by Campbell Liggins.