The director of a company serves as an agent or a steward. In a public company, the director is responsible for handling the affairs of the company and managing the money. The directors are appointed by the public shareholders and must be careful with the way the money is spent. Obviously, because the public’s money is involved, the Securities and Exchange Commission and the Australian Taxation Office both pay close attention to the steps taken by directors. A director penalty notice is usually sent to directors by the Australian Taxation Office, and while this might be regarded as a standard letter by most, it can have some serious implications for you if you receive one.
First and foremost, you need to understand exactly what the letter means. The context here is important because a lot of people tend to misjudge it. The Australian Tax Office has sent you a letter—the director penalty notice—because it has discovered that a company which you were, or are, a director of owes money to the tax authorities. If the tax hasn’t been filed on time, the letter might be submitted to your company. If there are other directors in the company as well, the tax authorities will send letters to them too. You can check out the director penalty notice defence letter example in order to get a better idea of the defensive options available to you.
Now, a common mistake that many people make when they receive this letter is that they don’t respond at all. If you do not respond, the ATO is going to make a record of this, and a statement of claim will be filed against you. If you fail to respond to the statement of claim as well, a default judgement will be made. The ATO knows how it works, and simply not responding is a terrible thing to do. They will end up taking money from you in one way or another.
Understanding the Law
One important thing that you need to understand is that the law is on the side of the ATO. The law does not side with you in these matters, nor was it ever intended to work that way. If you want even the slightest chance of winning, you must know these things.
As mentioned above, there are a few limited defences available to people who have received a penalty notice. One of these is to write a director penalty notice defence letter. However, the letter must be worded very carefully, and you need to talk to someone with experience in this field before you start writing the letter. There are two options available: you can either write an assertive letter or one that’s a bit more conciliatory, so it depends on your personal style. You need to correspond with the authorities regularly to ensure that you are able to minimise your chances of getting the wrong verdict and losing money.