What to Do When Your Company Owes Money
If you are the director of a company, or if you were once the director of a company, you can receive a director penalty notice. This is something you definitely don’t want to trifle with because it can be extremely damaging for you financially, at least, if you’re not careful. What this means is you need to pay close attention to your mail and if you receive one of these letters you need to jump into action immediately. That’s the only way to save your finances.
What it Means
A director penalty notice is a document sent by the ATO to directors of a company that is believed to owe money. This type of letter goes to any current or former director of the company and it makes you financially liable for the debt that the company has. That’s definitely not a position you want to be in. You want to make sure you avoid having to pay money that isn’t your responsibility and to do that, you’re going to need to file a director penalty notice defence letter. If you do, you may be able to protect yourself. If you don’t, you’re going to find yourself potentially paying a large amount of money.
Your Defence Letter
Sending a defence letter is a crucial step in this process. If you don’t send a letter and you simply ignore the document that you receive, it means that you are not disputing the debt. It also means you are not disputing the fact that you owe the debt. What that means is that the ATO, who sent you the letter in the first place, is able to simply go to the court and get a default judgement saying that if you don’t deny you owe the debt, then you must be admitting to the debt. Once that happens, the ATO can take one of many different routes to get the money from you, including garnishing your wages, taxes, and more.
When you write your letter you’re going to need to state a reason for the defence. It could be difficult for you to do because there are very few options when it comes to defences for a director penalty notice, but there are some out there. You’ll need to do some work to find out which ones are allowed and which ones might apply to you. You’ll also want to look for any other ways that you can protect yourself from liability for the debt and you’ll want to send out a letter immediately. Don’t wait. Make sure that you put together a cohesive letter that outlines your defence clearly and then make sure that you send it to the proper people. There should be an address for your response included in the letter that you receive. It can be difficult to get out of the debt, but it definitely is possible if you take action.
