Tax debts arising from ATO audits

Is my (director) client personally liable?

Whether a director is liable for tax debts that were discovered during an Australian Taxation Office (ATO) audit goes back to the question of whether the original lodgment or lodgments made during the audited period were made on time. If a director shows a history of ATO compliance, it is unlikely they will be the subject of the stronger action policy, which includes holding directors personally liable for company tax debts through the issuing of lockdown and non-lockdown director penalty notices (DPNs).

It is important to remember that from 1 April 2020, directors can become personally liable for company GST (including LCT and WET) debts as well as unpaid PAYG and SGC. This additional exposure to incur personal liability for GST places greater responsibility on directors to get their company returns ready and lodge with the ATO on time.