“ Many directors have ridden out a housing slump and finally have some home equity, but it might be the ATO that gets to cash in on it.”
Author: Michael Brennan
There has been a lot of media about the ATO starting to crack down on tax debt. The first weapon that they are deploying is the Director Penalty Notice or DPN. DPNs basically allow the ATO to recover a tax debt owed by a company from directors personally!
A DPN exposes the director’s personal assets, including their home, to claims for company GST, PAYGW and unpaid Super debt. Many directors have ridden out a housing slump and finally have some home equity, but it might be the ATO that gets to cash in on it.
When the ATO sends a DPN to a director, the director has 21 days to take certain steps. The ATO can, and usually will, commence recovery action against the Director if the DPN has not been complied with.
The clock for the 21 days starts from the date that the ATO posts the DPN. The ATO must post the DPN to the residential address for the director recorded on the ASIC file. It does not matter if the director no longer lives there and never gets the DPN. The penalty will be applied to the director personally without exception as if they received the DPN and did nothing.
Many directors move house and don’t update their residential addresses with the ASIC. In March this year, the directors of nearly 53,000 companies were written to by the ATO warning them about the pending use of DPNs to recover tax debt. Just like a DPN, those letters were sent to the Directors’ residential addresses.
If you are not sure what address you have recorded with ASIC, the easiest way to find out, is to do an online search. You can pay for a copy of your company extract from the ASIC via this link. The search costs just $9 and could be the best money you ever spend. If you have an old address registered, you must update it.
If you have a tax debt, it is incredibly important that any notice from the ATO is dealt with urgently to avoid your personal assets being attacked by the ATO.