Before you become a director

If you are about to become a company director, check for any unpaid or unreported PAYG withholding or SGC liabilities.

If you become a company director and the company has outstanding PAYG withholding and SGC obligations, you will become personally liable for a penalty equal to these amounts (these are called director penalties).

As a new director, you have 30 days, starting on the day of your appointment, before you become liable to director penalties equal to both:

• all of the company's unpaid PAYG withholding liabilities;
• all unpaid SGC liabilities from 1 April 2012.

However, as a new director, you will not be liable to director penalties for amounts due before your appointment if, within 30 days starting on the date of your appointment, the company does one of the following:

• pays their PAYG withholding and/or SGC debt in full
• appoints an administrator under section 436A, 436B or 436C of the Corporations Act 2001
• begins to be wound up (within the meaning of the Corporations Act 2001).

Even if you become a new director and you resign within the 30 day period, you will still be liable for the unpaid PAYG withholding and SGC liabilities of the company that were due before your appointment.

For PAYG withholding, you will also be liable for any unpaid liabilities for reporting periods that started while you were a director, except if you resigned before the first withholding event in that period.

For SGC, you will also be liable for any unpaid liabilities for reporting periods that started while you were a director, except if you resigned before the last day of the quarter.