GST TAX Alert – Director Penalties for Late GST to Apply from April 1, 2020

Parliament has recently passed legislation that increases the responsibility of directors’ taxation obligations. The Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 extending the director penalty regime to other taxes. If your business fails to pay its GST tax promptly, from the 1 April 2020 directors could be personally liable.

As the name suggests, the bill aims to reduce phoenix activity. Phoenix activity involves the creation of a new company to carry out the activities of one which has been intentionally liquidated in order to avoid settling debts.

The bill enables the Commissioner of Taxation to collect estimates of predicted GST liabilities where there are reasonable grounds to believe that the taxpayer, or related entities, are holding off lodging returns, or are stripping assets with the intention to defeat creditors.

The legislation extends this ability not only to GST but also:

• Luxury car tax
• Wine equalisation tax
• Existing PAYG Withholding and Superannuation Guarantee Charge liabilities

Phoenix activity and corporations dodging their tax obligations are detrimental to broader society. This is money that can be used to maintain infrastructure, build hospitals, roads and in a multitude of other civic purposes. It is vital that taxpayers are on top of their GST obligations promptly to avoid personal liability.

If you are not up to date with your GST tax lodgements, please contact the Morrows Tax and Business Advisory team immediately for assistance.