Where a buyer commences to hold all of the shares in a company (including a company acting as trustee of a trust), they are highly likely to be appointed as a director of that company.<\/p>\n
Although being a director in itself does not make the director personally liable for the debts of the company, there are two types of tax debts that are major exceptions to this rule, being PAYG withholding (\u2018PAYGW\u2019) and compulsory employee superannuation guarantee (\u2018SG\u2019).<\/p>\n
That is, directors can be made personally liable for any outstanding PAYGW or SG, even if <\/strong>they were not a director at the time the debt was incurred.<\/p>\n Therefore, a key component of the due diligence process undertaken by a potential purchaser should be an assessment of whether the company is up-to-date with its PAYGW and SG obligations (as part of this, a potential buyer should also consider whether any \u2018contractors\u2019 to whom payments were made would be seen as ’employees’ in the eyes of the ATO).<\/p>\n The buyer will also ordinarily want the vendor to provide some kind of indemnity in relation to the buyer\u2019s PAYGW and SG exposure.<\/p>\n Note also, however, that the \u2018old\u2019 directors do not cease to have exposure to unpaid PAYGW and SG.\u00a0 That is, both<\/strong> the \u2018old\u2019 and \u2018new\u2019 directors are all jointly and severally liable for these debts.\u00a0 This position does not alter even if a director resigns before the due date for payment of a relevant amount to the ATO.<\/p>\n","protected":false},"excerpt":{"rendered":" Where a buyer commences to hold all of the shares in a company (including a company acting as trustee of a trust), they are highly likely to be appointed as a director of that company. Although being a director in itself does not make the director personally liable for the debts of the company, there…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-13957","post","type-post","status-publish","format-standard","hentry","category-news"],"yoast_head":"\n