Director’s liability for tax and the COVID-19 ‘safe harbour’ rule in schedule 12

Inland Revenue has released BR Pub 20/06, “Income Tax and Goods and Services Tax – Director’s liability and the COVID-19 ‘safe harbour’ in schedule 12 to the Companies Act 1993”.

This public ruling considers the situation where directors of a company, in good faith, agree to the company carrying on business in reliance on the COVID-19 “safe harbour” in sch 12 to the Companies Act 1993 during the “safe harbour period” (3 April to 30 September 2020).

In particular, the ruling considers whether s HD 15 of the Income Tax Act 2007 or s 61 of the Goods and Services Tax Act 1985 (both of which relate to a director’s liability for tax of a company) will apply to a director of a company relying on the safe harbour provisions in schedule 12.

The ruling concludes that reliance on the safe harbour by a director, and the company continuing to trade or carry on business or incur new obligations on ordinary commercial business terms will not, in and of itself, result in a director’s liability for tax under those income tax and GST provisions.

Source document: Inland Revenue

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