On 17 April 2013, the ATO announced a program to contact directors regarding outstanding pay as you go (PAYG) liabilities as part of the Strengthening Director Obligations initiative.
Legislative references are to the Taxation Administration Act 1953 (TAA 1953) and the Superannuation Guarantee (Administration) Act 1992 (SGAA 1992).
A company is liable to a penalty to the extent the company fails to withhold or pay:
- PAYG amounts (Div. 12 TAA 1953 – remuneration, voluntary agreements, labour hire, TFN or ABN non-quotation, dividend, interest & royalty, foreign resident, natural resources, and managed investment trust payments);
- alienated personal services payments (Div. 13 TAA 1953);
- non-cash benefits (Div. 14 TAA 1953);
- adequate superannuation (Div 12 SGAA 1992); or
- a PAYG or superannuation guarantee charge (SG Charge) estimate (Div. 268 TAA 1953).
A director is liable to pay a concurrent penalty if the company has not withheld the amount on the initial day for withholding or liability and has not paid the amount by the relevant month, quarter or annual due date (sec. 269-20 TAA 1953). The director may be relieved of liability if the penalty is remitted because the company pays the amount, an administrator is appointed or the company begins voluntary winding up (sec. 269-30 TAA 1953) or the director establishes a relevant defence (sec. 269-35 TAA 1953).
The program is expressly limited to PAYG liabilities. It is common for companies with PAYG liabilities to have other withholding or SG Charge liabilities. If a taxpayer may be at risk, it may be appropriate to review all withholding and superannuation obligations and make a voluntary disclosure of any shortfall to obtain a reduction in penalties (PSLA 2003/11 – remission of PAYG penalty; PSLA 2006/6 – remission of SG Charge).