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5 February 2020 saw the long-anticipated Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 finally passed by both Houses. The legislation contains a raft of anti-black economy measures including the introduction of Director Penalty Notices (DPNs) and estimates for GST [and Wine Equalisation Tax (WET) and Luxury Car Tax (LCT)].

Directors will have a personal obligation to ensure that the companies they run either pay their GST debts or are placed into liquidation. If this does not occur then the ATO can issue Director Penalty Notice (DPNs) to make the directors personally liable for the GST (and WET and LCT) of the company.

NOTE: even new directors can be made liable for historic GST (WET and LCT) where these remain unpaid 30 days after their appointment. As a result, new Directors should be careful when being appointed to ensure they are not inheriting personal liabilities. This will be relevant in shares sale and purchase agreement transaction and will require extra checks/enquires to ensure there are no outstanding GST liabilities/DNPs.

The legislation will take effect from the start of the first quarter after Royal Assent. Assuming the legislation receives Royal Assent in the usual way, this means the new rules look set to start from 1 April 2020.”

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Post Author: DC Strategy