With some states in Australia potentially experiencing a second wave of COVID-19, many businesses are still struggling to cope with the financial repercussions since the start of the pandemic. As a director, you may be aware of the temporary relief measures put in place to protect directors temporary from personal liability during insolvent trading, effective 25th March to 25th September 2020 (if you would like to learn more about these temporary relief measures please click here . However, it is important to stay alert of other director obligations and liabilities, particularly the types of debt outlined below, that are not covered by these temporary relief measures:
1. PAYG, GST and Employee Superannuation debts
Directors may still be held personally liable for PAYG, GST and unpaid Employee Superannuation and withholding Tax debts by way of a Director’s Penalty Notice being issued by the ATO. These obligations are outlined under Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 and remain in effect during COVID-19.
2. Debts through Personal Guarantees
Where debts are incurred with a personal guarantee to the creditor, the director may still be held personally liable.
3. Outstanding Workers Compensation Debts
Directors can be held personally liable for Workers Compensation Debt if the company is unable to pay the debt and is being wound up. This is where the company has failed to maintain workers compensation insurance and the worker is injured during the course of the worker’s employment. The outstanding debt refers to the reimbursement for medical experiences and compensation unpaid to the worker.
We understand your business may be facing turbulent times with the full duration and impact of COVID-19 pandemic still unclear. If you would like more information on temporary relief measures, worried you may be personally liable for debt, or looking for options available to reduce financial distress to your company then please speak to Insolvency Services Australia for free and confidential advice on our 24/7 toll-free hotline on 1800 003 883.