The recent Federal Budget contains a number of new initiatives designed at clamping down on ‘phoenix activity’ while also giving the Australian Taxation Office extra powers to deal with employers’ failure to pay superannuation via an expansion of Director Penalty Notices (DPN). These changes are expected to be passed as part of the budget and will come into effect on 1 July 2011.
Previously, DPNs have been issued to company directors only with regards to missed PAYG tax obligations, they will now include the superannuation guarantee payment obligations. A DPN effectively places liability on a company’s directors should the company remain in default of its obligations.
A summary of the DPN changes includes:
The government also plans to crack down on ‘phoenix activity’, by which directors may have shifted assets from a financially troubled entity into a new business operated by the same or related people. The new business continues to trade under a new name with some or all of the assets of the previous business and theoretically none of the debt.
Changes proposed in the budget (Tax Laws Amendment (Transfer of Provisions)) will further clamp down on this type of activity.