New directors beware. An often unknown fact about being appointed as a new director is the almost immediate personal liability for some tax debts that arises upon such an appointment.
Before a person becomes a company director, check if the company has any unpaid or unreported PAYG-w, GST and SGC liabilities. Once a person is appointed as a company director they become personally liable for any unpaid amounts under the Director Penalty regime.
A new director can avoid becoming liable for director penalties that were due before their appointment, if within 30 days of their appointment, the company does one of the following:
- pays their debts in full for PAYG-w, net GST from 1 April 2020 (including luxury car tax (LCT) and wine equalisation tax (WET) amounts) and SGC from 1 April 2012
- appoints an administrator under section 436A, 436B or 436C of the Corporations Act 2001
- appoints a small business restructuring practitioner under section 453B of that Act
- begins to be wound up (within the meaning of the Corporations Act 2001)
Even if a person resigns as a company director within the 30 day period, they are still be liable for the company’s unpaid PAYG-w, net GST or SGC liabilities that were due before their appointment.
About the author
Kim Wallman is the principal of HLB Mann Judd Insolvency WA. He established the firm in 1995 and has over 35 years of experience in the insolvency and restructuring industry. Kim maintains his strong reputation through building trust, providing fair and expert advice and always maintaining an empathetic, compassionate mind-set.
If you have any queries about insolvency matters, please feel free to contact Kim on 08 9215 7900, 0411 619 256 or via email to email@example.com