Director liability for company’s non-compliance – employee obligations
All employers have certain obligations to fulfil in relation to employee wages and in particular an employee’s taxation and superannuation liabilities. Employers would know that they are required to withhold money from wages under the pay as you go (PAYG) system under the Income Tax Assessment Act 1997, but also that they must pay a superannuation guarantee charge (SGC) on behalf of an employee, under the Superannuation Guarantee (Administration) Act 1992.
This means that where an employer is a company, and the company fails to comply with their obligations under the PAYG system, or under the SCG provisions, a company director can be held personally liable for the amount that the company should have paid.
In certain circumstances, the ATO can force directors of a company that are unwilling or unable to meet their obligations, to personally pay those debts. This is achieved with the issue of a director penalty notice for an amount equal to these amounts.
If you are seeking advice about an employer’s obligations to employees, or directors’ liabilities for non-compliance of obligations to employees, please contact our office and make an appointment to speak with one of our experienced practitioners today: