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Leon
Leon, Solicitor
Category: Australia Law
Satisfied Customers: 42649
Experience:  BEc Dip Ed, Dip Law (SAB) MTax (UNSW)
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I have help a NZ friend to set up an Australian company

Customer Question

Hi,
I have help a NZ friend to set up an Australian company in 2013 for her to run her business here. I have agreed without any monetary rewards to become the sole director, public officer and secretary while she looks for a substitute later. Subsequently, she had run some successful events in Australia and managed to generate approximately $400,000 revenue which was later transferred to her NZ account. I have recently found out that she has not filed any tax return, BAS and have not paid any taxes or GST. I have also found out that she was listed as a bankrupt in NZ.
I have sent her numerous emails and spoken to her a few times and she always told me that she would do the necessary so that I do not get into trouble. She has recently given the accountant a name to take over my position as the director however it is still pending. However the previous tax return etc are still outstanding.
She is currently still using the company to do business in Australia and she may repeat what she has done previously and leave me with all the mess to clean up.
Can you please advise me legally what can I do to "force" her to submit the BAS and tax return as well as paying the full tax and GST?
Rgds, Aaron
Submitted: 1 year ago.
Category: Australia Law
Customer: replied 1 year ago.
I have no visibility over the operation of the company neither do I have any idea the profit that the company makes. Since her name was not listed as the director, is her action in a sense criminal?
Expert:  Leon replied 1 year ago.
Good Morning
My name is ***** ***** I am a NSW Solicitor. Thank you for your question, and will do my best to assist you with your question. Please understand this is not legal advise Please understand this is not legal advise but a guide to assist you.
You have a problem because you are the Director and you can be personally liable for the taxes that have to be paid.
Do you know what the taxes are?
Do you have any information about her income?
Customer: replied 1 year ago.
I believe some company needs to be paid but I have no idea what was the exact income at all. What would be the worst case scenario for me?
Expert:  Leon replied 1 year ago.
Good Morning
You can be sued for failing to do the returns and be found liable for the taxes and you can go to jail.
If you are the only director then you can send her a letter and advise that if she does not arrange to do the taxes and get them up to date you will be closing down the company.
She needs you to be there or the company cannot exist.
the GST is 1/11th of all sales she has made and then on top of that there is a 30% company tax on the profit.
Customer: replied 1 year ago.
I have already sent her numerous emails. There are also replies from her saying that she would do it but there always seems to be delayed due to her busy schedule.Even if the tax return is filed, am I liable to pay or would the new director be liable?
Expert:  Leon replied 1 year ago.
Good Morning
You are the director at the time and you are liable.
You would have had to open the bank accounts and do everything.
You speak to an accountant and have them deal with her.
He should be able to get information to work out what she has to pay and to have the money deposited into an account in Australia.
If she refuses close down the company and this will stop her being able to trade.
Customer: replied 1 year ago.
Apart from talking to the Accountant, can I get a lawyer to issue some sort of letter of demand to her?
Customer: replied 1 year ago.
Should I approach the Police for help as she is currently in Australia organising some events. Is what she is doing or seen to be attempting to do is a crime that I can take up with the enforcers?
Expert:  Leon replied 1 year ago.
Good morningThe police will not get involved with this. They will tell you it is a civil matter.She is in breach of the Tax Act. Being the Director of the company you are responsible for what it happening. I hope this makes sense and is of assistance.
Expert:  Leon replied 1 year ago.
Good Morning.
I'm just following up our discussion earlier this week and seeing whether there is anything else I can assist you with.
If I have missed anything, or you have any further questions please let me know.
If there is anything else in the future please do not hesitate to ask.
Please do not forget to leave positive feedback.
I look forward to hearing from you.
Regards
Leon
Customer: replied 1 year ago.
Hi,
to be honest, what you have told me I am already aware. What I was hoping was a recommendation from you on what are my options moving forward if I could not get any assistance from the person in question? Should I get a lawyer to draft a demand letter etc....
Expert:  Leon replied 1 year ago.
Good MorningI can only tell you what the law says. You have to sue the person for the money. You should be able to show that she was making the money and running the business and that she is liable for any tax. This would have to be done in NZ.It is a matter where you have to move quickly on this and start the process and seek orders that she diclose what she has been earning etc so that the reruns can be done. If you do nothing the ATO will chase you.