The Australian Tax Office has made amendments to tax laws that aim to protect employees’ entitlements by holding directors personally liable for unpaid superannuation. Currently an employee of a failed company can try to recover their entitlements through the General Employee Entitlements and Redundancy Scheme (GEERS), but this does not include any outstanding superannuation and can only be used if the failed company was placed into liquidation.
These amendments also allow the tax office to keep tax credits from the director’s tax returns if the company that they were a director of failed to pay withheld amounts to the tax office.
There have been concerns raised that these changes that the director may make payments to the tax office over other creditors to reduce their potential personal liability.