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Australia: Proposal to make director personally liable for company’s GST

Australia: Proposal to make director personally liable

A bill that would extend the “director penalty” regime, which lapsed when the federal election was called earlier this year, was re-introduced in the House of Representatives in early July 2019.


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Among a number of measures, the bill—Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019—proposes to allow the Australian Taxation Office (ATO) to make, in certain circumstances, directors personally liable for their company’s goods and services tax (GST) liabilities and to collect estimates of anticipated GST liabilities when remittances and filings have not been made.

The GST law contains complex provisions that give rise to legitimate disputes over the existence of a GST liability. The introduction of director penalty notices for GST liabilities is likely to encourage directors to take conservative positions when alternative positions may be supportable under the law. If the Commissioner of Taxation makes an estimate of an entity’s net liability, the entity is liable to pay the amount of the estimate to the Commissioner as if it arose on the day the Commissioner determines the entity was required to file its GST return. There are rules applicable in the event of bankruptcy.

Read a July 2019 report prepared by the KPMG member firm in Australia

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