Directors can be personally liable for a company’s unpaid superannuation under the ATO’s Director Penalty Notice scheme. This is a significant risk for directors of companies which are not paying super and can often result in directors going bankrupt.
So how and when can you be liable for your company’s unpaid super?
Lockdown Superannuation Director Penalty Notices
If your company doesn’t pay super, you are required to report the unpaid super to the ATO by lodging Superannuation Guarantee Charge Statements (SGC Statements). If you don’t lodge these SGC Statements by the due dates set out below you are automatically liable for the company’s unpaid super if your company doesn’t subsequently pay it. The ATO can recover this unpaid super from you by issuing you with a Director Penalty Notice, which they will do at some stage.
- The ATO can estimate unpaid super which is now easy for them to do as the data is available through Single Touch Payroll.
- Placing the company in liquidation or voluntary administration will not avoid liability.
- The ATO can and will issue this type of Director Penalty Notice your company has been placed in liquidation or voluntary administration.
The due dates for lodgement of SGC Statements to avoid automatic liability for unpaid super are:
21-Day Superannuation Director Penalty Notice
If you lodge SGC Statements by the above dates, then you can still be liable for your company’s unpaid super. This can still occur by the ATO issuing you with a Director Penalty Notice. However, because you have lodged SGC Statements as required, you can avoid liability under this type of notice by:
- Placing the company in liquidation within 21 days of the date of the notice; or
- Appointing a voluntary administrator within 21 days of the date of the notice.
This is of course if you don’t think that the company can pay the unpaid super in full or via a payment plan.
What you should do to avoid liability
If your company can’t pay super you should lodge SGC Statements within the timeframes set out above. If this is done, then you can’t get a Lockdown Director Penalty Notice. However, if you do get a 21-Day Director Penalty Notice you will then have the option of liquidation or voluntary administration to avoid liability.
Naturally, if your company can’t pay super you should also get advice on strategies which may be put in place to solve your problems and risks you face as a director.
Contact us for a confidential, no cost and no obligation discussion
If your company is having difficulty paying super or other debts, then you should urgently get professional advice. And TAX DEBT SOLVED can help. So, in these circumstances please contact us for a free, no-obligation consultation, contact us here.