So, you have your new business structure and are now a director of a company. Congratulation!.

Warning this article isn’t just for new directors.  It’s a timely reminder of a director’s responsibilities.

Running a company brings great opportunities, but it also comes with serious legal and tax responsibilities. If you are a director or company secretary, it’s important to understand what you’re personally responsible for — and what the risks are if things slip through the cracks.

This newsletter outlines the key things every officeholder needs to know.

1. ASIC Responsibilities
ASIC requires directors and secretaries to keep the company’s records up to date. This includes notifying ASIC when:
• A director or secretary is appointed or resigns.
• An officeholder changes their name or address.
• The company’s registered office or business address changes
These changes must be lodged within 28 days.
If they’re late, ASIC charges late fees, and if a resignation is lodged too late, ASIC will record the resignation as the date it was lodged, not the date it actually happened. This can unintentionally extend someone’s liability.
Directors must also follow general legal duties — acting with care, in good faith, and ensuring the company does not trade while insolvent. Breaches can lead to fines or, in serious cases, criminal penalties.

2. ATO Responsibilities – Personal Liability
Many people don’t realise that directors can become personally liable for certain unpaid company tax obligations.
The ATO’s Director Penalty Notice (DPN) regime can make directors personally responsible for:
• PAYG Withholding (tax withheld from st
If these amounts are not reported on time, directors can become locked into the penalty — meaning the only way to fix it is to pay the debt in full.
If the ATO issues a DPN, directors usually have 21 days to act. If nothing is done, the ATO can recover the debt from the director personally.
This is why keeping BAS lodgements and superannuation payments up to date is absolutely critical.

3. The Company Bank Account Is Not the Directors’ Money
A common misconception is that directors can treat the company bank account as their own. Legally, the company is a separate entity, and the money belongs to the company — even if you’re the only shareholder.
Funds should only be taken out as:
• Wages/salary for work performed.
• Properly declared dividends to shareholders
Using company money for personal spending, drawings, or “borrowing” from the business can trigger Division 7A

4. Division 7A – What Happens If You Take Money Out Incorrectly
Division 7A is an ATO rule that prevents shareholders from accessing company profits tax-free.
If you take money from the company in a way that is not wages or dividends, the ATO may treat it as a deemed dividend — meaning it becomes taxable income to you personally.
Alternatively, the company can set up a Division 7A loan agreement, but this requires:
• A formal loan contract
• Minimum yearly repayments
• Interest charged at the ATO’s benchmark rate (currently 8.37% for 2025–26)
If repayments aren’t made on time, the amount can again be treated as a taxable dividend.
This is why it’s so important to keep personal and business finances separate.

5. Key Takeaways
• Keep ASIC records up to date — it avoids penalties and protects directors.
• Stay current with BAS, PAYG and super — unpaid amounts can become your personal liability.
• Treat the company bank account as the company’s money.
• Be careful with drawings — they can easily become Division 7A loans or taxable dividends.
• If in doubt, speak with your accountant early. Fixing problems late is always more expensive.