ATO: Directors Tax & Super liability

As a company director you are responsible for ensuring that the company’s tax and super obligations are reported and paid on time. If your company does not pay certain liabilities by the due date, the ATO can recover these amounts from you personally as a current or former company director.

What is a director penalty

As a company director you become personally liable for your company’s unpaid amounts of:

These amounts that director’s are personally liable for are called director penalties. The ATO can recover the penalty amounts from you once they issue you a director penalty notice.

Becoming a new company director

Before you become a company director, check if the company has any unpaid or unreported PAYGW, GST and SGC liabilities. Once you are appointed as a company director you become personally liable for any unpaid amounts.

To avoid being made liable for any sort of outstanding tax and super debts, within the first 30 days of your appointment ensure the company has paid all outstanding debts.

You are no longer a director

If you resign as a director of the company, you remain liable for director penalties & for liabilities of the company that:

• were due before the date of your resignation
• fell due after your resignation if        
  • for GST and PAYGW (including LCT and WET), the first withholding event in the reporting period occurred before your resignation
  • for Superannuation Guarantee charge (SGC) liabilities, the date the charge became payable. 

If you resigned as a director before:

• the first withholding event in that period for PAYGW and net GST, you will also be liable for any unpaid liabilities for reporting periods that started while you were a director
• the date the SGC became payable, you will also be liable for any unpaid liabilities for reporting periods that started while you were a director of that company.

New directors need to be informed and stay abreast of all changes to their obligations & requirements. Directors tax and super liability is one of many that needs to be addressed responsibly.