Two directors receive notices for the same company tax liability
Distinguish linked company and director liabilities under section 269-40 from independently additive debts.
Corporate Recovery Partners
01 / 06
Matching notices need a careful reconciliation
Two directors receive penalty notices referring to what appears to be the same company tax liability. Do not simply add every notice to the company balance and call that the cash required to clear the problem. Equally, do not assume the notices are interchangeable. Obtain urgent advice on each person's position and have the underlying liabilities matched precisely.
Imagine a company with one tax period appearing in notices addressed separately to two directors. Create a comparison showing the company, tax type, period and amount in each document. Keep other periods and unrelated liabilities separate. Similar totals are not enough to establish that every line concerns the same obligation or that each director has identical circumstances.
Section 269-40 of Schedule 1 to the Taxation Administration Act addresses related company, director penalty and judgment liabilities. It provides for corresponding discharge when an amount is paid or applied to one of the covered liabilities, subject to the section's terms. Ask the lawyer to apply that rule to the actual records rather than treating the documents as several unrelated bills.
The statutory connection does not mean one small payment clears every balance in full. Show the amount actually paid or applied and ask what remains under the relevant liabilities. In the example, a payment against one company's obligation should not be assumed to reduce a different company's debt merely because the same people are directors of both.
Provide each notice and its delivery information to the relevant adviser. Ask what steps are required for each director while the payment position is reconciled. A shared company debt does not justify using another person's notice as your own procedural record. Record completed actions and obtain advice on any unresolved difference between the documents or account information.
Present the underlying obligations and related notices together, with the adviser-confirmed treatment of payments and remaining amounts. Explain uncertainty instead of counting everything twice or deleting items without support. The result should help directors understand the connected exposure and the work still required. It is not a reason to delay responding to a notice addressed to them.
