The difference between non lockdown and lockdown director penalty notices
“Non Lockdown” DPN’s: PAYG Tax, GST or Superannuation: Unpaid but Returns Lodged Within Relevant Periods
A company is required to:
- Pay PAYG Tax and GST to the ATO by due dates.
- Lodge Business Activity Statements (BAS) with the ATO each quarter reporting PAYG Tax and GST payable.
- Pay superannuation by due dates.
- If the company is unable to pay superannuation by due dates, it must lodge a Superannuation Guarantee Charge Statement (SGC Statement) with the ATO.
If a company does not pay its PAYG Tax, GST or superannuation, but lodges its BAS (within 3 months of being due) and SGC Statements (when due), the ATO can issue a Director Penalty Notice (DPN) to the company’s directors. If this happens it means that the ATO intends to hold directors personally liable for the PAYG Tax, GST or superannuation of the Company.
However, directors can avoid personal liability if:
- The company pays the PAYG Tax, GST or superannuation; or
- The company is placed in Liquidation or Voluntary Administration within 21 days of the date of the Director Penalty Notice.
“Lockdown” DPN’s: PAYG Tax or Superannuation Unpaid and Returns not Lodged Within Relevant Periods
A “Lockdown” Director Penalty Notice is issued by the ATO in circumstances where a company doesn’t pay its PAYG Tax, GST or superannuation and fails to lodge its BAS (within 3 months of being due) or SGC Statements (by required dates). If this occurs the directors will not have the grace period of 21 days and are automatically held personally liable for the PAYG Tax, GST or superannuation of the Company.
In these circumstances the ATO can estimate a company’s debts for PAYG Tax, GST and superannuation and rely on those estimates of to issue a Director Penalty Notice on the Director.
Further, voluntarily placing the company into Liquidation or Voluntary Administration will not avoid personal liability and the ATO can issue Director Penalty Notices even after a company is already in liquidation or voluntary administration.
The dates for lodgement of SGC Statements to avoid liability are now:
|QUARTER||PERIOD||SUPER DUE FOR PAYMENT||SGC STATEMENT DUE|
|1||1 July – 30 September||28 October||28 November|
|2||1 October – 31 December||28 January||28 February|
|3||1 January – 31 March||28 April||28 May|
|4||1 April – 30 June||28 July||28 August|
Given the serious consequences a Director Penalty Notice may have, it is important that you urgently obtain advice if your company is unable to pay PAYG Tax, GST or superannuation. Contact Macmillan for a free consultation today.