Directors may be personally liable for unpaid GST
The ATO’s Phoenix Taskforce has been conducting raids on pre-insolvency advisors, investigating whether they are providing advice to struggling companies on how to “phoenix a company” - i.e. where directors of a debt-laden company transfer that company’s assets to a new company (with the same directors) and then liquidate the old company to avoid paying employee entitlements, creditors or outstanding tax liabilities (GST and income tax).
One of the proposals to curb this type of “Phoenixing” behaviour is to extend the director penalty notice (DPN) regime to make directors of companies personally liable to pay a penalty equivalent to the amount of unpaid GST [i.e. similar to the current treatment of outstanding pay as you go (PAYG) obligations and superannuation guarantee (SG) charges].
If this proposal does become law, directors of companies will no longer be able to deliberately avoid the payment of income tax and GST nor exploit the time lag between collecting and paying tax to the ATO. We will keep you updated on any developments in this area.
The ATO recognises that people who participate in phoenix companies harm the economy and attempt to create an un-level playing field with companies that pay their taxes (i.e. phoenix companies can quote less for goods and services in the belief that they won’t pay tax). In this respect, Nexia supports the ATO’s work.
Data matching to ensure payment of overseas HELP & TSL debts
As mentioned in one of our recent Top Tax Tips, non-residents may have to make repayments (i.e. first payment may have to be made on 31 October 2017) of Higher Education Loan Programme (HELP) or Trade Support Loans (TSL) if their worldwide income exceeds the repayment threshold (i.e. $54,869 for the 2017 income tax year).
The ATO intends to data match individuals that currently live overseas and have outstanding HELP or TSL debts by comparing information (“movement data”) obtained from the Department of Immigration and Border Protection (DIBP) to the data the ATO has on such “student loan” debtors.
If you or your children currently have outstanding HELP or TSL debts and are either living overseas or intend to go overseas, we would recommend that you talk to your Nexia advisor about the outstanding student loans.
Pension transfer balance account reports (T-BARs) due soon unless exception
From 1 October 2017, a new T-BAR reporting regime applies to ensure individuals do not exceed their $1.6 million transfer balance cap in respect of their superannuation balances. Pursuant to this regime, certain movements in the pension account (e.g. retirement income streams, commutations, certain limited recourse borrowing arrangement payments) need to be reported within 10 days of the end of the month when the movement occurred.
There is however an exception for SMSFs – the T-BAR reporting regime will only be compulsory for SMSFs from 1 July 2018.