"Will no-one rid me of this troublesome debt?": directors' liability for unremitted PAYG

Woellner, Robin (2008) "Will no-one rid me of this troublesome debt?": directors' liability for unremitted PAYG. In: Australasian Law Teachers Association 63rd Annual Conference: the law, the environment, Indigenous peoples: climate for change?. p. 180. From: 2008 Australasian Law Teachers Association Conference: the law, the environment, Indigenous peoples: climate for change?, 6-9 July 2008, Cairns, QLD, Australia.

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Abstract

Directors of a company that fails to remit promptly to the ATO amounts deducted from employees' wages as PAYG (or similar) instalments are exposed to the possibility of very onerous penalties under Div 9 of the Income Tax Assessment Act 1936. The Div 9 penalty regime can have severe - and sometimes unfair - personal impact on directors who blunder into it (as the decisions in Saunig, Dick, and inferentially Perdikaris illustrate).

The risk is particularly high because the range of people caught as "directors" under Div 9 is very wide, while the defences available to avoid liability are potentially narrow.

However, there may be a glimmer of light for beleagured directors in the decision of the NSW Court of Appeal in DFC of T v Freudenstein 2007 ATC 5113. There, in a laudably brief judgment, the Full Court upheld the director's claim to have "reasonable grounds" to expect that their company would comply with a s222ALA agreement to pay the unremitted amount by instalments.

Too much should not be made of a single and very short decision - and there are many other snares awaiting a careless step - however, Freudenstein reflects a pragmatic and sensible approach to construing a Div 9 defence.

Item ID: 27960
Item Type: Conference Item (Abstract / Summary)
ISBN: 978-0646-49497-5
Keywords: taxation, company directors
Date Deposited: 29 Jul 2013 05:24
FoR Codes: 18 LAW AND LEGAL STUDIES > 1801 Law > 180105 Commercial and Contract Law @ 100%
SEO Codes: 94 LAW, POLITICS AND COMMUNITY SERVICES > 9499 Other Law, Politics and Community Services > 949999 Law, Politics and Community Services not elsewhere classified @ 100%
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