Director Penalty Notice
The Australian Taxation Office (ATO) has the power to collect outstanding deducted taxes by making directors liable for a ‘penalty’ of the same amount as the unpaid tax. These provisions create a liability to the ATO in the name of the director.
Each director of a company becomes individually and separately liable for the full amount of the penalty. If a Director receives a Director Penalty Notice, it requires the Director to take one of four specific actions within 21 days of issue, or the Director will be personally liable for the debt:
- Pay the debt in full
- Enter into an instalment arrangement to repay the debt
- Appoint a Voluntary Administrator, or
- Appoint a Liquidator