Directors to be personally liable for unpaid super
The Federal Government has introduced draft legislation that proposes to change the liability of directors for certain debts. The important aspects of the amendments are extending liability:
for directors under Directors Penalty Notices to include their company’s unpaid superannuation guarantee amounts; and
so that directors cannot avoid paying their director penalties by placing their company into administration or liquidation when unpaid Pay-As-You-Go (PAYG) withholding or superannuation guarantee remains unpaid three months after its due date.
This extends the liability that company directors have and increases their personal liability for payments due to the Government where a company is unable to pay its debts. If passed, these proposed changes will provide further to the complexity of the environment surrounding company directors and all directors should ensure that they familiarise themselves with these new laws.
The draft legislation also includes a number of defences that a director can raise to avoid liability. The main defence is where the amount was not paid but the director can show that:
- it was not paid because of illness or for some other good reason that prevented the director from managing the company property;
- the director took all reasonable steps to ensure that either (by taking all reasonable steps):
- the company would meet its obligations to pay;
- prevent an administrator of the company from being appointed; or
- prevent the company from being wound up.
This is a similar test to that of permitted individuals and whether a person took reasonable steps to avoid the coming into existence of an event to a building company or director under the Queensland Building Services Authority Act.
Whilst this is new legislation at StretenMasons Lawyers our Building and Construction team has extensive experience in acting for persons in these types of applications. Similar submissions are going to be required to satisfy these tests and as such we encourage you to contact us today if you have any concerns that you (or a someone that you know) may become liable for such a debt.
At this stage it is not known when these changes will be passed however check back to our website for further developments.