Director Tax Obligations

Don't Ignore Tax Obligations if you are a Director of a Company!

In February, businesses have to pay the January superannuation guarantee, January PAYG, December quarter BAS and perhaps PAYG Instalments.

Cash can be tight after the holidays, so there is a temptation to delay paying and/or lodging these.  Bad idea!

Changes in 2012 make directors personally liable for the unpaid PAYG Withholding and Superannuation.  The legislation also provides that where a company fails to lodge and pay for more than three months after the due date, the directors are personally liable.

If you become a director you only have 30 days to ensure the company is compliant with these obligations, and then personal liability commences.  So, make proper enquiries before consenting to be appointed.

Directors also need to ensure superannuation obligations are met, especially for contractors.  If the subcontractor is either a common law or a deemed employee under the Superannuation Guarantee Act, superannuation is payable and the ATO will collect it.  The ATO has a Questionnaire on its website to determine if the person may be an employee for superannuation purposes.  Let us know if you want the details.

There are no defences.  So, if cash is tight, look at all options and get some advice early.