Australia: Company Directors Liable for Unpaid Withholding Tax and Superannuation
An Australian court recently held a director personally liable for AU$1.9million in penalties for unpaid withholding tax (WHT) and superannuation. This is a reminder to directors of companies in Australia of their personal liability for their companies’ unpaid WHT and compulsory retirement contribution obligations.
The penalties arose from the failure of two Australian companies to remit various amounts withheld from salaries and to pay superannuation-related amounts to the Australian Tax Office. Consequently, the director became personally liable for the unpaid primary amounts, the associated penalties and interest. The director’s defense — on the grounds of illness and that the companies’ liquidation proceeds would cover the unpaid primary amounts and penalties — was rejected on the basis that the director failed to take appropriate action and could not be retrospectively abrogated.
The ATO’s powers also extend to garnishing directors’ personal bank accounts and other assets in advance of any appeal or court proceedings.