Changes to Australia’s tax laws “The Changes are part of the Government’s continued commitment to maintaining the integrity, equity and fairness of the tax system” “The Gillard Government is committed to protecting workers’ entitlements”

22 ► Effective 29 June ► Australian tax laws are reinforced to counter fraudulent phoenix activities and strengthen director’s responsibilities. ► Director’s have an obligation to arrange for their companies to meet Pay As You Go (PAYG) withholding and superannuation obligations. ► Protecting workers’ entitlements. ► Ensures that fraudulent directors who use phoenix companies to try and avoid their debts can be held personally liable for their PAYG withholding and superannuation obligations. ► Improve the regulatory environment for businesses that comply with the tax law. Introduction to the changes of Australia’s tax laws

33 ► Directors may become personally liable for their company’s unpaid superannuation guarantee charge for the quarters ended 30 June 2012 and subsequently, but not prior quarters. ► In addition to estimating unpaid PAYG withholdings liabilities, the Commissioner can now estimate unpaid superannuation guarantee charge. ► The previous law with respect to director penalty notices regarding reported liabilities continue. However, PAYG outstanding as at 29 June 2012 which was not reported within three months of the due date will result in a director penalty that cannot be avoided by placing the company into administration or liquidation. The only way these penalties can be discharged is by causing the company to pay the amounts withheld or to personally pay the amounts. ► In some instances, directors and their associates may become liable to pay the PAYG on their own wages where the company has failed to pay amounts withheld i.e. they wont obtain credit for tax deducted from their salaries where that money has not been remitted to the ATO. ► All PAYG withholding liabilities due after 29 June 2012 will be subject to the ‘new’ regime. Key changes to the director Penalty Notice Regime

44 ► Targets directors of companies that fail to meet their PAYG withholding obligations, including directors of fraudulent phoenix companies who often fail to meet their tax and superannuation obligations. ► Seeks to ensure that directors cause their company to meet certain tax obligations. ► Seeks to ensure that if a company is unable to fund its tax obligations, the director promptly puts the company into liquidation or voluntary administration. Director penalty regime

55 The law has changed to address certain limitations ► The director penalty and estimates regime applying only to PAYG withholding liabilities. ► A director’s ability to achieve remission of director penalties by placing their company into administration or winding up within the director penalty notice period, irrespective of the length of time that the liability has gone unpaid and unreported. ► A director’s ability to benefit from using PAYG withholding credits to offset their own income tax liability when the company had not paid withheld amounts to the Commissioner.

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