Business owners now personally liable for GST compliance

From the start of April 2020, the tax office will be deeming directors as entirely liable for their company’s GST responsibilities.

The additional liability is an extension of the already existing DPN (Director Penalty Notice) regime. Previously, the regime had applied to PAYG withholding and superannuation guarantee liabilities, but the extension also covers GST, luxury car tax and wine equalisation tax.

Although the majority of Australian businesses do meet their GST liabilities, some struggle to make payments on time due to cash-flow issues.

Company directors who fail to report and pay overdue GST will now be held accountable – and the ATO suggests that penalties could be severe. Inadvertent oversights and systemic errors will not be excused. Even directors who resign prior to the GST due date will still be liable.

Passive and inattentive directors should take this as a serious warning of significant consequences if GST compliance is not met in the future.

As a result of this change, it is more important than ever for business owners to understand and adhere to their tax obligations. It is also vital that directors are structuring their business strategically to ensure that their assets are protected if something goes wrong.

Most directors find that keeping up-to-date with complex tax law is challenging and best left in the hands of a tax accounting professional. If you need some assistance with small business tax or tax structuring for asset protection, contact one of our tax champions.