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The IGTO and insolvency firms have seen a spike in director penalty notices issued for companies liquidated several years ago.
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Tax Office ‘dredging up’ decade old director debts
27 March 2024
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With the ATO’s platforms becoming more sophisticated and identifying debts more efficiently, insolvency firm Worrells is seeing an uptick in director penalty notices (DPNs) being issued that relate to very old debts from many years ago.
Worrells principal, Central Coast, Christoper Darin said he has seen examples of clients receiving lockdown DPNs for debts that relate to companies that have been wound up several years ago.
“They’re dredging up some of these old matters and I would suggest its automatic,” said Dairn.
Inspector-General of Taxation and Taxation Ombudsman (IGT) Karen Payne said DPNs are also one of the key areas she is receiving complaints about at the moment, particularly those relating to old debts.
“One complaint recently came in about a debt that was around 14 years old. How is somebody going to have a memory of the circumstances from 14 years ago and access those records? There’s no longer the requirement to keep access to records,” said Payne.
“[Also], if the actual company has been wound up or it’s been put into administration, then they don’t even have access to the actual company records to go back and check themselves.”
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The IGTO said this can be a complex and stressful experience for these directors as it can be difficult to verify what the debt is, how it arose and whether it’s actually correctly calculated.
“One of the other problems that comes up where the company no longer exists or where the company is now in liquidation or in administration is that the ATO says that the director is no longer the authorised contact for that company so they won’t tell the taxpayer anything,” Payne explained.
The ATO has previously stressed that taking action on DPNs is essential for ensuring that businesses do not get an unfair financial advantage and to protect other creditors and employee entitlements.
“Taxes pay for the services and support that everyone in Australia benefits from. Paying taxes in Australia is not optional and our job is to ensure everyone pays the right amount and on time, to the benefit of all Australians,” the ATO said in a recent statement.
“We encourage taxpayers who need help or more time to pay to reach out to the ATO or their tax professional early to discuss their situation.”
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