The PAYG Penalty can have very costly personal implications for directors of companies that become insolvent. In a recent decision, Stellar Corporate Solutions failed to remit PAYG tax to the ATO and as a result, their director was deemed personally liable for the substantial debt that was incurred. This article highlights the importance for directors to appreciate the personal finacial implications that may result from failing to pay this particular tax.
The recent appeal decision of BCI Finances Pty Limited (in liq) v Binetter  FCAFC 189 illustrates the requirement of actual acts or omissions of a director to give rise to a breach of directors’ duties. The appeal concerned the liability of Gary Binetter, the son of Erwin Binetter. Erwin, alongside his brother, Emil, had orchestrated a tax avoidance scheme to avoid paying the ATO monies which would otherwise be payable, utilising offshore funds in Israeli Banks to maximise interest deductions on the family company’s tax returns in Australia. Gary had been a director of one of the family companies involved in the scheme, and the question was whether the inference of knowledge of the surrounding facts and circumstances was enough to give rise to a breach of his directors’ duties.
Non-compliance with a statutory demand is the most common way to prove insolvency.
The recent decision of the Supreme Court of Victoria in A G Coombs Pty Ltd v M & V Consultants Pty Ltd (in liq)  VSC 468 illustrates the issues faced by the recipient of a statutory demand who disputed the debt on which the demand was based. While it was argued that they were unquestionably solvent, the recipient failed to make an application to have the statutory demand set aside within the 21-day time limit.