4. Update on the new ATO legislation


Grant Darmanin (ATO)


  • Opportunities and challenges
  • Proposed ATO approaches
  • Further legislative ideas
  • The (new) tax legislation which received Royal Assent on 29 June 2012, formed part of an election commitment the government gave in 2010 to protect employee entitlements by reducing the threat posed by fraudulent phoenix operators. The legislation can however potentially apply to any company director who is not meeting their pay as you go withholding or superannuation guarantee obligations.
  • The legislation provides new (personal) disincentives for company directors who avoid their tax and superannuation obligations.
  • The legislation protects worker's entitlements and strengthens company director obligations by:
    • Extending the director penalty regime and the estimates regime to superannuation guarantee.
    • Ensuring that directors cannot extinguish their director penalties by placing their company into administration or liquidation when pay as you go withholding (PAYG withholding) or superannuation guarantee remains unpaid and unreported three months after the due date; and
    • Making directors and their associates, in some instances, liable to PAYG withholding Non-Compliance Tax (NCT). This tax operates to reduce or reverse the (personal) benefit received from PAYG withholding 'credits' where a company fails to pay PAYG withholding amounts withheld to the Commissioner.
  • The ATO received increase funding from government to assist in administering the new legislation.
  • A key ATO strategy is to expose as many fraudulent phoenix operators to the legislation, as quickly as possible.
  • There are opportunities for other agencies to support the ATO in its administration and enforcement of the new legislation:
    • ASIC might advise of any trend data to assist in confirming or denying recent claims by the media that the rate of company administrations and liquidations have increased significantly during the past few months.
    • FWO field officers who detect unpaid PAYG withholding tax and/or superannuation guarantee liabilities that are unreported for more than 3 months should refer this information to the ATO as a matter of priority. NB: In October 2012 the Fair Work Ombudsman and Commissioner of Taxation will sign a Memorandum of Understanding (MOU) in recognition of the need for both agencies to work more closely together.
    • DEEWR has agreed to forward GEERS data to the ATO on a quarterly basis and to include ABNs, where appropriate.
    Last modified: 14 Dec 2012QC 26757