Lodge your SGC on time, or a lockdown DPN is imminent.
Back in the good old days, the director penalty regime only applied to unpaid pay as you go (PAYG) amounts owed by a company. As time passed, mounting superannuation debts prompted the Australian Taxation Office (ATO) to expand the director penalty regime to incorporate superannuation. These reforms were enacted way back in 2012. Not only did these reforms incorporate superannuation into the director penalty regime, they also brought with them a new concept. Directors can no longer avoid liability for a director penalty where a debt remains unpaid and unreported for a period of 3 months from the due date for reporting of that debt. This has become colloquially known as a 'lockdown director penalty", where placing a company into an external administration appointment won't result in that penalty being remitted.
Whilst the above changes may be widely known given they have been around for well over a decade, what might be less well known is that the regime was amended further in April 2019. This amendment removed the 3 month disclosure period for superannuation guarantee obligations. The effect of this change is that a lockdown director penalty now applies in respect to superannuation outstanding by a Company. This penalty is enforced if the debt is not reported by lodging a superannuation guarantee charge (SGC) statement by the due date (being 1 month and 28 days from the end of a quarter). That is, superannuation guarantee charge (SGC) statements must be lodged on time, otherwise the lockdown director penalty regime kicks in.
What are the impacts of the changes now that they have been around for 5 years? Typically, what we see now is that the ATO will send out three director penalty notices which provide the following:
- Lockdown/non-lockdown notices in respect to any outstanding GST;
- Lockdown/non-lockdown notices in respect to any outstanding PAYG;
- Lockdown notices in respect to any outstanding superannuation.
Whilst there are no doubt cases where superannuation has been reported within the required timeframe to preserve the director's personal liability as a non-lockdown director penalty, I actually can't recall the last time I saw a superannuation director penalty notice which wasn't a lockdown notice. Anecdotally then, it appears that superannuation guarantee obligations are not typically reported strictly on or before the "due date".
The outcome of all this is any client that has lodged a superannuation guarantee statement outside of the due date and there remains an outstanding superannuation debt will already have a lockdown director penalty, they just may not yet know it.
If you've received a DPN, or anticipate that you could, reach out to your local Worrells Principal for a confidential, no-obligation chat.
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