We believe everyone understands the importance of making sure the address for the company’s registered office is correct on ASIC records. Often the job of making sure this is right is left to the Accountant, and more often than not the registered office is the Accountant’s address. After all, this address is where the ATO will send demands for payment.
What may be less well understood is the importance of making sure the Director’s address is also correct. It is quite possible the Accountant may not know that the Director has moved. Is it even reasonable to assume that maintaining the correct address for the Director is the Accountant’s responsibility? How many Directors would remember to change their ASIC records when they change addresses?
Why is having the correct Director’s address important? The answer is, that this is where the ATO will send a Directors Penalty Notice (DPN). The ATO can issue a DPN for amounts that represent unpaid PAYG and Superannuation. This makes the Director personally liable for these unpaid amounts. Some notices give the Director the ability to achieve remission if they place the company in Administration or Liquidation within 21 days of the date of the DPN.
So, the ATO send the DPN to the Director's ASIC address.
Not the address on the personal tax return.
Not the address on BAS lodgements.
There is not even any guarantee the ATO will send a copy of the DPN to the company’s registered office (although they sometimes do). They send the notice to the Director’s address recorded on ASIC. When the ATO does this, the DPN is viewed as having been validly served. The Director cannot argue that he did not receive it.
de Jonge Read recently had a case where the client had not updated his address on ASIC records in many years. The registered office address was correct – the Accountant had made sure of this. The ATO sent the DPN to an address the Director had not lived at for over 4 years. This DPN would have given the Director the ability to achieve remission of his personal liability if the company had been placed in Administration or Liquidation within 21 days of the date of the notice. The DPN was dated January 2016. The client had no idea this had been issued when he met with de Jonge Read in April 2016. The first he knew of the outstanding DPN was when the ATO instituted recovery action against him personally in September 2016.
If the Director had ensured the correct address was recorded on ASIC he would have received the DPN. By engaging with de Jonge Read immediately it would have been possible for him to achieve remission of his personal liability.
We assist clients in this area, and make sure they are given every opportunity to manage their personal liability. We could have done so in this case, if only the correct address had been on ASIC records.
Should you have clients or associates that you know are struggling with financial issues, our team of Strategists would be pleased to discuss options that are available. Call us now on 1300 765 080.