What is a Letter of Demand 222AOE Notice?
Are you prepared for a letter of demand to directors from the Australian Tax Office – 222AOE Notices?
Directors may become personally liable for tax debts of their companies
in which they are directors if they fail to comply with the terms of a
Section 222AOE Notice. This notice is also often called a director
penalty notice.
A director penalty notice is NOT a court issued document. It is a
document issued by the Australian Tax Office under the Income Assessment Act in
respect of PAYG withholding amount (i.e. the tax amount deducted from
the employee wages and entitlements but which have not been remitted to
the ATO).
If the director penalty notice is not complied with within 14 days, the
director(s) will become personally liable for the outstanding debt as
described in the notice.
A director penalty notice will usually provide you with the following options:
- That the company’s liability be discharged; or
- That you enter into an installment agreement under Section 222 (ALA) of the ITA 1936 Act; or
- That the company goes into administration; or
- That the company has been wound up
If none of the four options are available then, at the end of the 14
days, the director(s) will be personally liable for the debts as
specified in the notice.
The notice is generally issued to a director’s residential address as notified on the ASIC records.
A director’s failure to maintain their current address details with
ASIC may mean that they do not receive the correspondence (because it
went to an old residential address); however this is not a valid
defence to argue that the notice was not received.
Helpful Hint: Ensure that your address details with ASIC are up-to-date!
Explore the Fraud and Insolvency blogsite for real case studies.