Directors' personal liability for PAYE and GST debts 'deeply troubling'

The Institute of Directors (IoD) has strong concerns about the Tax Working Group’s proposal to make directors personally liable for company PAYE and GST debts.

“The prospect of director personal liability for company taxes is deeply troubling and may have far-reaching and unintended consequences for New Zealand companies. The risks attached to being a director are high and keep increasing. The IoD is concerned that the increasing liabilities may deter people from seeking board roles,” General Manager of IoD’s Governance Leadership Centre, Felicity Caird said today.

“Increased liabilities for directors are likely to drive up compliance and insurance costs. It also moves the focus from a board’s core role of strategic thinking and oversight for companies, to a more risk averse and compliance focused model that could deter directors from taking appropriate business risks.

“Withholding funds from the IRD is illegal and the IRD can already take action if it decides to. Directors already carry significant personal liabilities and we do not see the need to introduce this further liability – especially as the unintended consequences are likely to far outweigh any potential benefits to the country.”

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