Question:
Company directors beware: super and PAYG
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
Personal director obligations for unpaid PAYG withholding tax will be beefed up under a draft bill released for comment. The bill also sheets home responsibility for unpaid super guarantee to company directors personally.
The change was announced in the May Budget and was aimed at phoenix companies but significantly increases personal liability risk for all, including the most diligent directors.
Currently, where a company has unpaid PAYG withholding liabilities the Tax Office can issue a Director’s Penalty Notice and the director has 21 days to either:
+ Cause the company to pay the tax;
+ Negotiate a payment arrangement for the company; or+ Put the company into voluntary administration.
If those actions are not taken in the allotted time the director will be personally liable for the PAYG. There is no current personal director liability for unpaid super guarantee.
Under the draft bill the director penalty regime would be expanded to:
+ Make directors personally liable for unpaid super guarantee;
+ Allow the Tax Office to immediately commence recovery action against the director if the PAYG or super guarantee liability remains unpaid and unreported for three months after the due date;
+ At that time a director’s personal liability can extinguished by payment of the debt and penalty;
+ The Tax Office can disallow PAYG withholding credits, from directors’ own salaries and their families or other associates’ salaries from the company;
+ A new company director would also be personally liable in those circumstances after fourteen days from the time they commence their directorship;
+ Defences for the director against personal liability are limited to illness, extended leave at the time of the problem or if they took all reasonable steps like putting the company into voluntary administration; and
+ The director must raise the defence within sixty days of receiving a director penalty notice.
WTB 1310
