Company directors have a legal responsibility to ensure that their company meets its pay as you go (PAYG) withholding and superannuation guarantee charge (SGC) obligations.
The director of a company that fails to meet a PAYG withholding or SGC liability by the due date automatically becomes personally liable for a penalty equal to the unpaid amount.
When a PAYG withholding or SGC liability remains outstanding, the ATO may issue a director penalty notice, although this is only necessary to enable then to start legal proceedings to recover the penalty. Even without issuing a notice, they can collect the penalty by other means, such as withholding a tax refund.