Bates Cosgrave | Directors face greater scrutinty

29 July 2011

Draft legislation released last month will see Directors become personally liable for the superannuation guarantee (SG) payments of employees. The change is part of a suite of reforms designed to target phoenix companies but the reforms, if enacted, will have a much broader impact.

A phoenix company is the deliberate liquidation of a company to avoid paying liabilities including employee entitlements. The business then 'rises' and continues operations through another corporate entity, controlled by the same person or group of individuals, often with a very similar name and free of the debts.

The legislation, if enacted, will also give the tax office the power to pursue directors where PAYG and SG remain unpaid and unreported for more than three months beyond the due date.

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