Let's face it - no one really likes the ATO. Dealing with tedious tax returns and the like can be a drag on your small business finance, and it only gets worse when they start dishing out what can seem like unfair penalties!
As annoying as they can be, the ATO does play a crucial role in ensuring small businesses across Australia are following financial best practices and operating within legal boundaries. That means you should be aware of any changes they make to their rules - and the DPN is one such example.
For those still unsure about the concept, DPN - or director penalty notices - represent a fairly recent tweaking to Australia's taxation system, the bulk of the changes coming on June 30 last year. As a small business owner, it's important you understand the ramifications of this.
The main crux of the new regime is that the personal liability of company directors for failing to report certain taxation has been expanded. In the past, directors were only penalised if they failed to meet their pay as you go (PAYG) withholding payments.
Am I boring you yet? Do read on, it only gets better.
The new system means that this liability has extended to the company's superannuation guarantee charge (SGC) obligations as well. So basically, if you fail to meet either your PAYG or SGC payments (or dare I say, both) by the due date, you personally become liable for the unpaid amounts.
Sneaky as they are, the ATO can issue this penalty in a number of ways, for example by withholding any tax refunds owed to you. In most cases though they will issue a formal notice.
The best way to avoid getting in this situation is of course by making sure you're reporting your taxes on time. Newly appointed directors do get a bit of leeway with a 30 day grace period, but this luxury isn't offered to incumbent directors.
By making sure you're staying on top of your PAYG and SGC obligations, you can take a whole taxation burden off your shoulders.
Wishing you all the best for your week in business.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].