Did you know that directors can be personally liable for unpaid superannuation and PAYG withholding?

 

Did you know that the directors of a company can be personally liable for its debts that are in relation to unpaid Pay As You Go Withholding (PAYG Withholding) and unpaid Superannuation Guarantee Charge (super)?

If a company’s PAYG Withholding or super are not paid by their respective due dates, the directors of the company will become personally liable for those amounts. To recover the unpaid PAYG Withholding and super, the Commissioner must issue a Director Penalty Notice on the directors.

A director penalty is remitted if, before receiving the Director Penalty Notice or within 21 days of receiving the Notice, any of the following steps are taken:

  • The company complies with the obligation by paying the outstanding amount
  • The company appoints an administrator; or
  • The company begins to be wound up

Remission of this director penalty will be denied if 3 months have lapsed after the due date and the liability remains unpaid and unreported.  Putting the company into administration or in the process of being wound up will not remit the penalty that has been issued.

New directors of the company can also be personally liable for the company’s unpaid PAYG Withholding and super amounts, even if the debts have been outstanding prior to their appointment. To avoid personal liability for the company’s pre appointment unpaid debts, if the new director cannot either have the debts fully repaid or the company put in administration, the new director should resign within 30 days of being appointed.

If you are behind with paying PAYG Withholding or superannuation and want to take steps to minimise the risk of personal liability please contact us on  +61 2 9683 5999 to discuss further.