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Debtor Finance Blog

A letter to directors – from the ATO (ATO Director Penalty Notice)


Interesting, isn’t it, how that title really only grabbed your attention when you got to the bit that mentioned the ATO?

I’ve discussed the importance of complying with the ATO in past blogs and YouTube entries and I’ve always been a firm believer in the benefits of playing it safe with the ATO rather than flaunting the rules. Now the Australian Tax Office is getting serious about Company Directors and non-compliance.
This brief blog piece is all about a couple of important letters that are most definitely worthy of your attention. Firstly, I recently received an email from Neil Cussen, a partner with Deloitte Touche Tohmatsu restructuring services. His email was to advise me that Deloitte had themselves recently received a letter from the ATO Director Penalty Notice/PAYG Non-Compliance Tax Working Group (whew!), advising what the ATO is up to, and just how important it is that company Directors whose companies have outstanding PAYG withholding/payment obligations

If you’re the Director of a company that has outstanding PAYG withholding/payment obligations, you guessed it…you may be about to receive a letter. Just to put you ahead of the game, a copy of the draft letter is available right (Click Here) .

It’s well worth a look. The letter is a stern reminder that the Director Penalty Regime applies to Directors in their personal capacity. Make no mistake; if as a Director you do not take corrective action, penalty notices will be issued shortly thereafter by the ATO.

In the short term, the ATO will focus its efforts on company Directors who have a history of non-compliance. ‘Known offenders’, if you like. But the ATO is clear that they’ll eventually expand their reviews and enforcements to include all Directors of companies with outstanding withholding and superannuation payments.

If all this has suddenly renewed your interest in the ATO and its activities, you’ll be happy to know that they’ll soon be publishing quite a bit more information regarding their expanded Director Penalty Regime, including such information as;


  • Guidance on the expanded system
  • A full ‘Fact Sheet’ for company Directors, including PAYG withholding non-compliance tax
  • An outline of how the ATO will administer the system

In addition to the above, the ATO may also issue a Fact Sheet especially designed for tax agents.

What happens now?

There have been rumblings and rumours for awhile now, but this latest letter confirms that the ATO is about to focus sharply on company Directors whose companies have outstanding PAYG withholding/payment obligations, and it’s worth stressing again that the Director Penalty Regime will be imposed on Directors in their personal capacity. If your company has a history of unpaid tax - perhaps brought about by cash flow issues - now is the time to act if you wish to avoid a Director Penalty Notice.

Of course if you have any questions about the ATO’s upcoming Director Penalty notice, or if you just want to discuss some business cash flow options that might help keep you on the ATO’s good side, feel free to contact me via email Jason.Smith@cashflowadvantage.com.au.

Wishing you a great week in business,