Directors of companies are personally liable to pay PAYG withholding tax and superannuation guarantee contributions unless within 21 days of the ATO posting a Director’s Penalty Notice the moneys outstanding to the ATO are paid in full or the company is placed into voluntary administration or the company is placed in liquidation.
If the company fails to report taxation liability within 3 months of when the company should have reported (3 months from the end of the withholding period) then the director is still personally liable notwithstanding the fact that the company is placed into voluntary administration or liquidation. Remission will only apply upon payment in full.
Therefore, in order to avoid a director’s personal liability in these circumstances it is paramount that the company at least report its PAYG and superannuation guarantee contribution obligations on time, even if they are unable to pay them. This will leave open the three options, (payment, voluntary administration or liquidation) for remission of the penalty against the director personally.