PROPOSED new laws introduced in Federal Parliament yesterday have significant ramifications for all company directors.

Under the Tax Laws Amendment (2011 Measures No. 8) Bill, the veil of protection granted to company directors will be further weakened and the assets of directors will increasingly be at risk.

The Bill is designed as part of a crackdown on Phoenix operations, or businesses that liquidate a debt laden company only to open their doors again under a new company structure.

CRC understands the need for strong legislation that allows the Australian Tax Office to recover taxes from shonky operators but the impacts of this legislation are enormous for directors of legitimate companies that are going through tough times or have failed to submit the relevant paperwork in time.

Under the proposed new regime, tougher rules will apply as soon as the Bill is passed to directors if their companies fail to lodge superannuation guarantee statements with the tax office on time or if there are any shortfalls in superannuation or PAYG payments.

Under the Bill the Commissioner for Taxation would be able to immediately claim against directors’ assets if superannuation and PAYG shortfalls are unpaid and unreported after only three months.

These changes would make it easier for the tax office to claim the personal assets of directors to pay for unremitted employee superannuation guarantee amounts.

At present the tax office has to issue a Director Penalty Notice, which gives directors time to get their house into order, but this proposed regime will involve an immediate claim on directors’ assets.

As a result it will become exceptionally important for company directors to ensure that all tax office returns – Activity Statements and Superannuation Guarantee Statements – are lodged by the due date.

Directors will need to ensure that company executives and officers are lodging tax returns on time and making the correct payments to ensure that they are minimising the impact of potential claims against their own personal assets.

These changes further whittle away at the very protections which make company structures so appealing for business owners and increasingly leave the personal assets of directors at risk from claims from the tax office.