In May this year, legislation was proposed to expand the Australian Taxation Office’s (ATO) power regarding director penalty notices. Known as the Tax Laws Amendment Act (2012 Measures No. 2), the legislation received Royal Assent on 29 June 2012 and is now law.
The changes are part of Federal Government reforms to counter fraudulent activity by so-called phoenix companies, where companies are deliberately liquidated to avoid paying liabilities such as superannuation and taxes.
The new laws impose serious penalties for non-compliance on all company directors, not just phoenix operators. Directors – including those in not-for-profit organisations operating through companies – must mitigate their personal liability risk by effectively managing tax liabilities.