It's that time of year again
17th November, 2007
June always focuses Business Owners on the fact that it is tax time and that it is time to get our affairs in order so that we can finalise our 30 June 2005 financial figures and payments.
It is also the time of year the Tax Office focuses on businesses and their activities.
The Tax Office has available certain avenues that enables it to recover unpaid taxation.
For those of us who are directors of a company we should be very aware of Section 222AOE Notice.
Larry the Landscaper – A possible scenario
Larry the Landscaper has been working very hard as a Director of his company and has left the financial affairs to his financial controller because he is too busy digging holes and planting plants.
Larry has had a fantastic year also (so his financial controller has been telling him) so he doesn’t bother reading his financial reports at the end of each month.
One day Larry has just been sitting at the kitchen table and one of his children has handed him a drawing which is on the back of a form he received in the mail sometime ago but did not read.
While Larry is looking at the drawing he decides to read what is on the other side and it is a Section 222AOE Notice.
Larry finally reads the notice and realises that he will be personally liable to pay the tax owed by his company if he fails to do one of the following four things within 14 days of receiving the notice.
According to the notice, Larry must either:
- Get the company to pay the amount of tax outstanding before the due date.
- Enter into an arrangement with the Tax Office whereby the company will pay specified amounts on specified days to pay the outstanding amount.
- Appoint an Administrator to the company.
- Wind up the company.
Larry is a pretty relaxed fellow and doesn’t worry about it. As Larry does nothing within the14 days, he is sued personally for $100,000.00 for the unpaid tax liability, the results of which can be catastrophic.
What can be learnt from Larry’s scenario. As a director you should always be vigilant and on the lookout for section 222AOE Notices from the tax office. If a 222AOE Notice does arrive then you have to carry out one (1) of the four (4) options listed above to avoid personal liability. If at the time Larry received the notice he sought legal advice or financial advice he may have avoided any personal liability whatsoever.
Larry’s situation may seem a little far fetched however, it is not all that uncommon in the day to day running of a busy business. The time limits are strict, there have been cases where people have become Director’s of company’s and only been Directors for some 17 days and have incurred personal liability of up to $250,000.00.
You have 14 days within which to react if you receive a Section 222AOE Notice to give yourself the best chance to achieve a positive outcome.
Should you wish to discuss any matters please do not hesitate to contact Tony Scoglio of Scoglio Law on (07) 3833 2100 or tony@scogliolaw.com.au.
The information produced in this article is for information purposes only. It is not intended that you act on this advice. Should you wish to do so it is recommended that you seek further legal advice and/or financial advice.
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