The Tax Laws Amendment (2012 Measures No 2) Bill 2012 and the Pay as You Go Withholding Non-compliance Tax Act 2012 were introduced into parliament on 24 May 2012 and passed on 27 June 2012.
The legislation aims at reducing the scope for companies to engage in fraudulent phoenix activity and to extend director penalties to include additional liabilities such as unpaid amounts of superannuation guarantee charge.
Key implications and changes:
- extend the director penalty regime so directors may now have personal liability for their company’s unpaid amounts of superannuation guarantee charge;
- permit the Australian Tax Office to estimate the amounts of the company’s unpaid and overdue superannuation guarantee obligations and impose liability by issuing a notice;
- owners and directors of small to medium businesses need to be aware that there may be cases where the ATO issues a director penalty notice based on an estimate of superannuation guarantee charge in circumstances where it has not yet been able to identify the relevant employees entitled to the superannuation;
- ensure that directors cannot evade director penalties by placing their company into administration or liquidation when amounts of PAYG withholding or superannuation guarantee remain unpaid and unreported three months after the due date;
- in some cases, make directors and their associates liable to PAYG withholding noncompliance tax where the company has failed to pay amounts withheld to the ATO; and
- concern for ATO’s ability to estimate and impose unpaid superannuation due to inherent complexity of the legal test of employment requires a consideration of the “totality” of the relationship.