The law aims to increase directors’ personal liabilities.
Paying taxes
In addition to super and PAYG tax, the directors are now personally responsible for the company’s GST liabilities.
Avoiding paying the company’s debts
Criminal offences and civil penalty provisions have been introduced for those who create a new company to continue the business of a company that has been deliberately liquidated to avoid paying the original company’s debts.
Increasing the accountability of resigning directors
Directors are held responsible for misconduct. Directors will be prevented from inappropriately backdating resignations or ceasing to be a director when this would leave the company with no directors.
Holding tax refunds
ATO can now hold tax refunds when a taxpayer has failed to lodge a return to ensure that companies satisfy their tax obligations and pay outstanding tax amounts before being entitled to a tax refund.
Directors should be informed that their obligations and potential liabilities will be increased. Therefore, they need to consider a proper cash flow management to avoid tax liability and also strictly consider the refusal of creditor-defeating dispositions wherein their company is proposing to transfer or sell off company assets.
