The Government has recently legislated significant changes to Company Director Penalties. These changes have been introduced in an attempt to discourage corporate and financial sector misconduct. Key changes include, expanding the penalty regime to a wider range of scenarios and introducing harsher penalties for offences.
Another area where the Government has been very active in is attempting to combat illegal phoenix activities. Phoenix activity, put simply, is where a new company is set up to continue the business activities of another company that has been wound up to defeat creditors (which includes employee payments of PAYGW and superannuation).
It is very important for all company directors and officeholders to understand the duties they must uphold, and the penalties that could potentially be imposed for any wrong-doings.
The Government have adjusted the corporations legislation in order to standardise the penalties for breaches. To demonstrate the extent, there are over 700 potential penalties that have been increased.
One of the main issues that the Government is cracking down on, is late director resignations. The maximum penalty for not lodging a Director’s Resignation with ASIC within the required 28 day period, could potentially be 120 penalty units ($25,200). Other notification breaches that could attract similar penalties, include lodging notification of change of address details within the 28 day period.
Changes to Director Penalty Notices (DPN) are also being tabled at the moment, and we await further announcements from the Government. Currently, DPN’s can be issued and make Directors personally liable for unpaid Employee Superannuation and PAYG Withholding. The Government is proposing to expand DPN’s to also make Directors personally liable for GST.
There is currently a lot of activity in the area of Director and Corporate Penalties. If you are currently a Director of a Company or looking at becoming a Director and would like further clarification around these significant changes to the law and how it may affect you, it is recommended that you contact one of the Halpin Partners Team to discuss.
