Tag: Penalties

DIRECTOR PENALTY NOTICES TO INCLUDE UNPAID SUPERANNUATION

In the recent 2011 Federal Budget, the Government made its intentions clear in dealing with “phoenix activities” by Directors.

The term “phoenix activities” is commonly used to describe arrangements whereby a company incurs, but does not pay, various liabilities whilst carrying on business activities.

The amendments proposed are to extend the “Director Penalty Notice” provisions in the Taxation Administration Act 1953 (which currently apply in the main to unremitted PAYG deductions) to include unpaid superannuation guarantee amounts, a change which may result in Directors becoming personally liable for unpaid amounts of this type.

If the legislation is amended in accordance with the budget announcement, Directors may become personally liable for unpaid superannuation amounts merely because of an inability of the company to pay rather than any activity which might be considered to be fraudulent. This should be sufficient encouragement for Directors to ensure that arrangements are in place for the timely payment of superannuation guarantee obligations.

Director penalty notices – part 2

This is the second of a series of videos prepared by Insolvency Experts
Director penalty notices are notices that the Australian Taxation Office may send to directors of a company that has unpaid PAYG Withholding. The notice serves to make the directors personally liable for this debt of the company.
If the company makes payments to the ATO after receipt of a director penalty notice, but subsequently goes into liquidation, the personal liability of the directors may be revived. This video explains that trap.

Insolvency Experts have no connection with Thomson Hall. Apart from finding their newsletters and and videos quite useful, we know nothing of the quality of their work and offer no opinion on whether you should use them in preference to other insolvency practitioners.

Superannuation trustees penalised

The trustees of a self managed superannuation fund have been issued penalties of $30,000 and ordered to pay $32,500 in costs for breaching the rules relating to their fund.

On 15 October 2007 the Federal Court declared that the trustees for the Axent Group self managed superannuation fund (SMSF) had breached superannuation legislation by selling a property belonging to the fund and using the proceeds of nearly $150,000 to pay a private debt.

The couple had accessed assets in the superannuation fund before meeting any conditions of release such as retirement or reaching preservation age.

Deputy Commissioner Raelene Vivian said the action was part of an increased compliance focus on SMSFs by the Tax Office.

“The main purpose of SMSFs is to provide for retirement. Trustees who access their superannuation without meeting a condition of release are breaking the law and risking their retirement savings.

“The Tax Office provides a range of educational material to ensure trustees are aware of their roles and responsibilities.

“It’s vital SMSF trustees make sure they understand their legal and regulatory obligations as they are legally responsible for managing their fund.

“SMSFs which do not comply with the legislation are at risk of prosecution, penalties and additional tax,“ Ms Vivian said.


ATO press release
For more information about SMSFs, whether they are right for you and an SMSF checklist visit www.ato.gov.au or contact Stephen Hall or Gavin Thomson at Thomson Hall