In summary

Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 has been passed by both Houses and look set to start from 1 April 2020. This Bill introduces a rate of anti-black economy measures including the introduction of Director Penalty Notices (DPNs) and estimates for Goods and Services Tax (GST), Wine Equalisation Tax (WET) and Luxury Car Tax (LCT) .

In detail

5 February 2020 saw the long-anticipated Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 finally passed by both Houses.  The legislation contains a raft of anti-black economy measures including the introduction of Director Penalty Notices (DPNs) and estimates for GST, WET and LCT.

Directors will have a personal obligation to ensure that the companies they run either pay their GST debts or are placed into liquidation.  If this does not occur then the ATO can issue DPNs to make the directors personally liable for the GST, WET and LCT of the company.

The only change to the legislation made by the Senate is for there to be a review of the legislation after five years. 

Now that the legislation has passed both houses, it awaits Royal Assent (usually 7-10 working days).  The legislation will take effect from the start of the first quarter after Royal Assent.  Assuming the legislation receives Royal Assent in the usual way, this means the new rules look set to start from 1 April 2020.

Worryingly, even new directors can be made liable for historic GST, WET and LCT where these remain unpaid 30 days after their appointment.  As a result, new Directors should be careful when being appointed to ensure they are not inheriting personal liabilities.

Tax teams can expect extra scrutiny of GST after the introduction of these measures. 

These new measures are described in more details in the attached Tax Brief.