The Australian Taxation Office (ATO) has recently announced an update to Practice Statement Law Administration (PS LA) 2011/18, which focuses on the enforcement measures used to collect and recover tax-related liabilities.
This update is particularly important as it expands guidance on the Commissioner’s power to estimate unpaid Goods and Services Tax (GST) liabilities and issue Director Penalty Notices (DPNs) for GST debts.
If you are a business owner or a company director, this change could impact you significantly. Let’s break it down in simple terms.
What Is Changing?
The ATO has always had the ability to enforce the collection of unpaid tax liabilities, but now they are clarifying and strengthening their approach to estimating unpaid GST debts.
This means that:
- The ATO can estimate how much GST a business owes if the business fails to lodge its Business Activity Statements (BAS) or underreports its GST liabilities.
- Directors of a company may be personally liable for unpaid GST through Director Penalty Notices (DPNs).
- The updated ruling does not remove any previous information but instead provides clearer guidance on how these enforcement measures will be applied.
Why Does This Matter For Businesses?
GST is a self-assessed tax, which means businesses must calculate, report, and pay their obligations correctly. However, if a business fails to meet its GST responsibilities, the ATO can step in and take action. With these updates, it now has a stronger and clearer process to ensure compliance.
For company directors, this is a major warning. The ATO can issue a Director Penalty Notice (DPN), which holds directors personally accountable for the company’s unpaid GST. This means that even if a company goes into liquidation, the directors can still be pursued for the unpaid tax.
How Can Businesses Stay Compliant?
- Lodge your BAS on time—even if you can’t pay in full, timely lodgment helps avoid severe penalties.
- Keep accurate records—proper bookkeeping ensures correct GST reporting.
- Seek professional advice—consulting a GST expert can help you navigate complex tax laws and avoid unnecessary risks.
If you’re unsure about your GST compliance, now is the time to take action! KPG Taxation specialises in GST management, helping businesses avoid penalties and stay on top of their tax obligations.
Contact us today to ensure your business remains compliant and penalty-free!
