Directors who have amassed large assets, such as trophy homes and flash boats, while not passing on collected taxes to the government, are some of the first in the firing line.
The Tax Office is ramping up action against company directors as it chases $2.5 billion in unpaid taxes from businesses that have failed to pay superannuation, pass on GST or pass on income tax of employees.
DPNs are a government instrument that make directors personally liable for a company’s tax debts. If ignored, the notices can lead to serious outcomes for directors, including the seizure of assets, bankruptcy or the garnishing of wages by the ATO. “We have increased our use of firmer debt collection actions, including director penalty notices and disclosure of business tax debts, although some actions still remain below pre-COVID levels,” the spokesperson said.“Taxpayers who do not pay on time and in full may be subject to formal legal recovery action by the ATO where they do not engage with us.
“Too often, the ATO is treated by directors as a lender of last resort to allow directors to meet other business payments such as staff costs, suppliers, rent, services,” Sozou said. “There is this perception you don’t need to immediately pay the Tax Office.”On the other side of the coin, Sozou said, strict ATO enforcement could have serious flow-on effects.
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