March 30, 2023

Increase in Directors seeking help with Director Penalty Notices Issued by the ATO

There has been a marked increase recently in Directors seeking help after they have received a Director Penalty Notice from the ATO.

Many directors knew their company had outstanding debts but were unaware of their personal liability until a director penalty notice (DPN) arrives from the ATO.

Directors are becoming aware of the fact that they will be personally liable for the debts unless they put THE company into administration, liquidation or actually pay the debt.

Directors are generally aware debts are outstanding. The surprise bit is ‘What do you mean I could [be] personally liable for it?’’

The ATO said it has already dispatched 3,350 DPNs to directors with respect to 2,462 companies over the first two months of this year and was sending them at a rate of about 100 a day – roughly the same as the second half of 2022.

It had also disclosed 110 businesses to credit reporting agencies, taking the total to around 600 this financial year, and had hardened its line on referrals.

Starting this calendar year, when a business meets the criteria for disclosure, they will automatically receive an intent to disclose notice which gives them 28 days to take action before the debt may be considered for disclosure to a credit reporting bureau,” the ATO said.

Directors very often themselves are unaware that their lodgements are late, very often they entrust that to the services of an employee with the organisation.

With the ATO’s resumption of debt collection activity last year they are chasing collectible debt of almost $45 billion, up from a pre-pandemic figure of less than $27 billion.

That’s indicative of the fact that previous monies which ought to have been collected, haven’t been collected.

A lot this is legacy debt that has not been paid down, and there’s been a fresh accumulation of debt which hasn’t been paid as a direct consequence of COVID and the financial implications that flowed from COVID.”

If you have received a Director Penalty Notice and need assistance with this please contact our office on 9387 5673.

Source: Accountants Daily
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