Have you recently received a Director Penalty Notice (DPN) from the Australian Taxation Office (ATO), but don’t have the means to repay the tax debts being demanded?

Worried you might lose your family home or other valuable personal assets?

Don’t panic you may still have options to avoid strict personal liability, if you have lodged your Business Activity Statements and Superannuation Guarantee Statements (within 3 months of their due dates).  If you have lodged these statements but not paid the underlying debt, the ATO may issue a regular DPN and you will be given 21 days to avoid becoming personally liable for the PAYG and superannuation. This 21 day period starts ticking the day the ATO sends the Director Penalty Notice – so you must act fast.

What are my three options?

Your first option after receiving a regular Director Penalty Notice is to pay the debt owed in full. However, if you do not have the means to pay the debt, there are two formal solutions available to you.

The second option is to appoint a liquidator to your company. This option will avoid the director becoming personally liable. Please note that the appointment must be formally made within the 21-day period.

The third option is to appoint an administrator. The appointment of a voluntary administrator must likewise be formally made within the 21-day period.

What happens if I don’t meet the 21-day deadline?

Failure to take one of the 3 options within the 21 day time period of receiving a regular Director Penalty Notice means the director will become personally liable for the debt set out in the notice.

This could result in the director becoming bankrupt if they are unable to pay the debt, which may result in them losing personal assets and the family home.

Did you know there are several types of DPN notices? – be aware of the Lock Down Notice!

 If the director has failed to lodge their Business Activity Statements and Superannuation Guarantee Statement within 3 months of their due dates, then the director automatically becomes personally liable for the unpaid PAYG and superannuation. In these circumstances the ATO will issue a different type of notice.  This notice will be a lock down DPN. A lock down DPN can be issued by the ATO at any time, even after the appointment of a liquidator or administrator.

The only way to avoid a lock down DPN is to ensure that all Business Activity Statements and Superannuation Guarantee Statements are lodged within 3 months of their due dates.

The Importance of keeping your address current

DPNs are sent to the director’s residential address as recorded with the Australian Securities and Investments Commissions (ASIC). This is why it is crucial that your personal address is up-to-date with ASIC, otherwise you may miss receiving a DPN and will miss the opportunity to avoid personal liability.

Where does Australian Company Liquidations fit in?

At Australian Company Liquidations, we assist company directors to place their companies into liquidation or administration within the required time frame should they receive a regular DPN.  If you receive a lock down notice we can also assist with personal bankruptcy or a Personal Insolvency Agreement.

Remember to act fast as you only have 21 days from the date of the notice, so don’t delay taking action. Protect your personal assets now by calling us on our toll-free hotline at 1800 981 070.

What is Provisional Liquidation?

Provisional liquidation is an interim procedure to protect a company’s assets under specific circumstances. If you are a shareholder, director, or creditor, you may think about provisional liquidation to keep the company’s assets safe and secure. According to the law, the provisional liquidation procedure can only be initiated under particular conditions.

What situations call for provisional liquidation?

• Investors think directors are acting recklessly. Shareholders who don’t like what the directors are doing can ask for provisional liquidation to get a third-party manager and protect the company’s interests.
• Creditors suspect the debtor company is disguising assets: Provisional liquidation could be an option for creditors who are worried that a debtor company will hide assets or make them hard to get to.
• The conflict between the directors of an insolvent business before liquidation: The company’s future course may be compromised if there is conflict among the board of directors. In this case, the corporation and its assets may be safe if a provisional liquidator is put in charge until the problem can be fixed.

Who can apply for the appointment of a provisional liquidator?

The appointment of a provisional liquidator may be requested by creditors, members or stakeholders, the firm, and the court. ASIC has a history of filing applications for provisional liquidators in certain circumstances. ASIC may become involved in situations where a company has misappropriated investor funds, made transactions without apparent commercial justification or violated record-keeping and account-keeping regulations. These situations may also involve the company engaging in illegal transactions under the law. At APRA’s request, a court could choose a provisional liquidator, which would be the last step.

The Advantages of Appointing a Provisional Liquidator

Asset protection and having a third party look into the company’s affairs are two of the main benefits of provisional liquidation.

Asset protection

At a crucial time when there is a high risk of asset dissipation, the provisional liquidator safeguards the company’s assets (typically experiencing financial difficulties). Provisional liquidation lets the directors and officers of a company hand over control to a neutral third party who will act in the company’s best interests.

An unbiased investigation

The company’s activities are looked at, and the temporary liquidator gives the court an honest opinion about how things are going with the company.

What happens following the appointment of the provisional liquidator?

The provisional liquidator’s job is to keep the company’s operations and assets running until the court decides how to close it down. The company will typically continue to an actual liquidation, and it is typical for the same provisional liquidator to remain an official liquidator. In other words, the provisional-liquidation stage is over because the corporation goes into liquidation. However, a successful reorganisation may cause a preliminary liquidation to stop in specific circumstances. During the provisional-liquidation period, the company could successfully restructure its operations and finances, restoring its solvency and allowing it to resume normal business activities. The time between the wind-up application’s filing and the actual wind-up hearing can be pretty significant.

Contact Australian Company Liquidations if you would like more information about company liquidations. We are registered business liquidators who provide a free 24/7 insolvency hotline for Australian directors looking for expert help. Call us right now at 1800 981 070.