Amendments to tax laws by the Australian Taxation Office (ATO) aim to protect employees’ entitlements by making directors personally liable for any unpaid superannuation.
Currently employees of failed companies may seek to recover their entitlements through the Government’s General Employee Entitlements and Redundancy Scheme (GEERS). However this does not include outstanding superannuation and is not available to employees unless the company is placed into liquidation.
The amendments also allow the ATO to withhold tax credits from a director’s individual tax returns where a company of which they were a director has failed to pay withheld amounts to the ATO.
Concerns have been raised that these changes may result in payments being made by the indebted company to the ATO in preference to other creditors in order to reduce a director’s potential personal liability.
If you have any concerns about these amendments, talk to your Chartered Accountant.