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Can I be personally liable for company debts to the Australian Taxation Office?

Question

Can I be personally liable for company debts to the Australian Taxation Office?

Answer

Yes.  A notice issued by the Australian Taxation Office (ATO) may automatically make the directors personally liable for the tax debts owed by the company.  Once issued the only way to avoid personal liability is to have the company wound up (liquidation), an administrator appointed, pay the amount owing or comply with a repayment plan agreed to by ATO within 14 days from the notice being issued.  If the repayment plan is not completed, the directors will be automatically personally liable for any shortfall.

It is important to understand that the ATO only has to send the notice under Section 222AOE to the director's personal address as last advised to the Australian Securities and Investments Commission.  If the notice is not received or delivery is delayed then directors may become personally liable for the debt before they have any knowledge of the notice.  It is therefore imperative that companies seek immediate advice if ever they are unable to meet their obligations to the ATO. 

 

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