GST – Personal liability for directors

03 March 2020

Leisa Rafter, Partner, Tax |

The Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 passed through the Senate on 5 February 2020 and has now received royal assent. This means that from 1 April 2020, directors can be personally liable for unpaid GST in some instances.

Important changes for directors

The Bill introduces a number of changes targeted at addressing illegal phoenixing and the recovery of GST and other indirect taxes. The Bill extends the current laws under which directors can be liable for unpaid superannuation and withholding tax. Directors can now also be personally liable for:

  • GST
  • Unpaid Luxury Car Tax (LCT)
  • Wine Equalisation Tax (WET).
  • Unpaid superannuation and withholding Tax (under the extension of current laws).

In addition, the Bill prevents directors from backdating resignations or resigning where it will leave the company with no directors.

GST estimates and tax refunds

The Bill allows the Commissioner to estimate an amount of GST, LCT or WET owing where a return has not been lodged, and the taxpayer will be liable to pay the estimate.  The Commissioner will also be able to withhold tax refunds where an entity has not lodged a return.

Compliance is key

With the passing of the Bill, it is important that Directors have processes in place to ensure that tax lodgements and payments are up to date. Directors need to ensure that they are complying with their obligations under the Corporations Act at all times.

If you need assistance in managing the GST implications that may arise from these changes, BDO has a wide range of tax specialists who can help, contact an adviser today.