Phoenix company legislation - making Directors liable

The Assistant Treasurer is seeking submissions on draft legislation to protect employee superannuation and other obligations from ‘phoenix’ directors and their companies.

However, the legislation will have an impact beyond phoenix companies making all directors personally liable for the employee entitlements.

As you will be aware, ‘phoenix’ activities involve the liquidation of a company to avoid paying debts often including outstanding employee entitlements such as superannuation and taxes. A new entity is then formed with the same owners or group of owners as the old company and the same or similar business operated through the new entity which is now free of these debts.

The amendments propose the following changes:

1. Extension of the director penalty regime to make directors personally liable for their company’s failure to pay employees’ superannuation guarantee amounts.
2. Giving the ATO the power to immediately pursue directors to recover unpaid PAYG withholding or superannuation guarantee liabilities where the obligations remain unpaid or unreported for 3 months after the due date.
3. Allowing the Commissioner discretion to prevent directors and their associates from obtaining PAYG withholding credits where the company has an outstanding PAYG liability.

If you’d like to discuss your individual situation, contact us today on 3490 9988 and speak with one of our professionals.