The Australian Taxation Office (ATO) recently announced a new data-matching program that will have significant implications for company directors across Australia. This initiative, detailed in a Gazette Notice dated 26 August 2024, involves the ATO acquiring officeholder data from key regulatory bodies, including the Australian Securities and Investments Commission (ASIC), the Office of the Registrar of Indigenous Corporations (ORIC), the Australian Charities and Not-for-profits Commission (ACNC), and the Australian Business Registry Service (ABRS).
What Does This Mean for Company Directors?
As a company director, you have a broad range of responsibilities under company law and tax law. The ATO’s latest move underscores the importance of meeting these obligations, particularly concerning tax and superannuation. The ATO will now have access to detailed data on officeholders, allowing them to link individual directors to the companies they manage with unprecedented accuracy.
Key Objectives of the Data-Matching Program
The ATO have advised that the primary goals of this data-matching program are to:
- Enhance Compliance: By linking directors to their associated companies, the ATO aims to improve voluntary compliance with tax and super obligations. The program will also help the ATO identify and educate directors failing to meet these obligations.
- Promote the Director Identification Number (Director ID): The program will support the ABRS in increasing the uptake of the Director ID by ensuring that all officeholders are aware of their obligations.
- Combat Illegal Activity: The data collected will deter and disrupt illegal phoenix activity—a practice where a company is deliberately liquidated to avoid paying debts, including taxes and employee entitlements, only to re-emerge under a new name.
- Strengthen Community Confidence: By publicising this program, the ATO aims to bolster public confidence in the integrity of the tax and super systems.
- Increased Risk of Director Penalty Notices
One of the critical implications of this program is the potential increase in the issuance of Director Penalty Notices (DPNs). A DPN is a notice that can make directors personally liable for unpaid company tax and superannuation obligations. With the ATO now having enhanced capabilities to link directors to their companies, the risk of receiving a DPN has never been higher.
Why Timely Action Is Crucial
If you are a company director, it is essential to act quickly if you receive a DPN or any other correspondence from the ATO regarding your company’s obligations. Ignoring these notices can lead to severe consequences, including personal liability for unpaid taxes. However, timely action often provides options to mitigate the risks.
How We Can Help
Navigating the complexities of director responsibilities and ATO obligations can be overwhelming, especially when faced with the potential for personal liability. At Knight, we specialise in providing expert guidance to company directors, helping you understand your obligations and explore the options available to you. We can also engage directly with the ATO on your behalf, ensuring that your interests are protected during this stressful and challenging time.
The ATO’s new data-matching program is a significant development that all company directors should be aware of. By staying informed and taking proactive steps, you can minimise risks and ensure compliance with your tax and super obligations.
If you need assistance or have any concerns about your responsibilities as a director, don’t hesitate to contact us at Knight.
We are here to support you every step of the way.
