Govt deferral threatens phoenix action

taxation/government-and-regulation/director/superannuation-contributions/government/

8 December 2011
| By Chris Kennedy |
image
image
expand image

A decision by the Government to withdraw an amendment to the director penalty regime from its recent tax laws amendment means the initiative to target phoenix directors may be lost, according to partner at Holding Redlich lawyers, Jenny Willcocks.

On 21 November, the House of Representatives passed the Tax Laws Amendment (2011 Measures No 8) Bill 2011, but without the Schedule 3 section of the Bill that would have extended the director penalty regime to make directors personally liable for their company's unpaid superannuation guarantee amounts.

The House of Representatives Economics Committee had previously recommended deleting Schedule 3 (described as "badly drafted" by Coalition members of the committee) to allow further consultation. This would help identify additional defences that would allow innocent directors to avoid exposure to the director penalty regime.

Willcocks said there had been a concern directors not involved in wrongdoing could be caught up by the measures, and while the Bill provided defences to overcome this it would still be up to the directors to bring themselves within those defences - effectively a 'guilty until proven innocent' approach.

But if the measures were to only target directors found guilty of phoenix activity, that would mean it could not be applied until those directors were convicted - inevitably, long after the assets have been disposed of and became unrecoverable, she said.

It seems the initiative may be lost unless the Government can work out defences that are seen as offering adequate protection to innocent directors, Willcocks said.

"I doubt that directors will consider any defence acceptable, as it will always be up to them to successfully plead that defence," she said.

"While this debate continues, members continue - through no fault of their own - to lose superannuation contributions as a consequence of these schemes. It is disappointing, but it seems the opportunity may have been lost."

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

1 month 3 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

Entireti has unveiled the new name for the AMP financial advice businesses that it acquired last year....

3 weeks 6 days ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

2 weeks 5 days ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

1 week 4 days ago

TOP PERFORMING FUNDS