LET'S TALK TAX! Taking on Directorship roles.

Pot Luck Stream

There are many things to consider before taking on the role of a director of a company. Such a role brings with it many responsibilities and obligations under various laws in Australia. It is important to understand the risks being undertaken, as these risks can become personal liabilities.

Under the Corporations Act 2001, there are some strict laws that dictate the duties and responsibilities of a director. Breaches of these laws may have consequences for you personally.

There are also liabilities of the company that can become personal liabilities of directors. For example, the ATO has the power to pierce the corporate veil and target a director’s personal assets for unpaid debts. This includes for underpaid or unpaid superannuation, PAYG withholding and GST.

A few simple principles to abide by to help manage these risks include:

• Understand what the company is doing;
• Be honest and careful in all dealings as a director, by acting in the company’s best interests, even if this is contrary to your own personal interests;
• Ensure the company can pay its debts on time, including taxes to the ATO. If there are grounds for suspecting the company is insolvent, the company must not trade, incur debt, or continue to conduct business as usual – instead trusted professional business advice should be sought;
• Keep proper financial records for the company; and
• Do not use information gained in the capacity as director to gain an unfair advantage over others.

Directorships should not be taken lightly, but with proper planning and oversight, the duties and risks can be managed.

See more details and guidance in this article here:

Reference note - the above has been extracted from the above article by Pilot Partners.