With the recent increased activity of the Australian Taxation Office, specifically the launch of (a rumoured) 50,000 warning letters to directors to get their company’s affairs in order and take action on outstanding tax debts, directors need to be alert to the steps they need to take.
These warning letters are almost certainly the precursor to a Director Penalty Notice (DPN) being issued.
For our recent article on DPNs, click here.
Here are some key practical tips for any directors who have received one of these letters from the ATO, or may shortly receive a DPN:
- The DPN will be issued to you personally, at the address, you have recorded with the ASIC as your contact address (not the company’s registered office). Accordingly, make sure that address is up to date! You should not rely on your accountant or tax agent to receive this notice and inform you. The notice is issued to you, not your accountant.
- If you receive a DPN but have resigned as a director of the company, it should not be ignored. It has been issued to you because it relates to a liability incurred in the period you held office. Resignation does not absolve you from liability.
- You have only 21 days to deal with this DPN. That 21 days starts ticking from the date of issue by the ATO, not the date you receive it!
If you are one of the tens of thousands of directors who have received a letter from the ATO, the time to act is now, not when the DPN arrives. The 21-day period to act leaves limited time for your accountant and lawyer to assist you in advising on options, including potential defences. Given the recent changes regarding payment arrangements, it is also more beneficial to enter into a payment arrangement now (and potentially avoid the issue of the DPN entirely) than after the DPN is issued, as the latter will not offer you the protection from the liability if the company does not ultimately pay the debt.
Be proactive and seek the guidance and advice of your professional advisors now. Our team at Cronin Miller Litigation is here to assist.
