Businesses have obligations to appoint different officers to represent the company. A public officer is one of them. Read more to understand whether your company needs one, what they are and how the appointment process works.
What is a Public Officer?
A Public Officer is a company representative and “trustee”, who makes sure the company’s conduct complies with the Income Tax Assessment Act. When they do this, they may look into matters concerning the company’s taxes, accounting, finances and lodge particular returns (e.g. trust tax return) with the ATO.
Do I Need One?
Most likely yes. All Australian companies that carry on business or derive income from property in Australia require one.
Your business may be exempt if it consists solely of dividends, interest and/or royalties subject to withholding tax, or you have written permission from the Commissioner.
Why?
If you don’t or you forget to inform the ATO that you have, you can be prosecuted. You can be fined at “one penalty unit” ($222 if it occurred on or after July 2020) per day, until you do so. This is because a failure to appoint a public officer is in contravention of the law, specifically Section 252(1) of the Income Tax Assessment Act.
Note: The cost of penalty units depends on which date you failed to appoint or inform, so refer to this table for further details.
Who Can Be One?
ATO states that they must be a natural person who is:
- At least 18 years old
- Ordinarily residing in Australia
- Capably understands the nature of the appointment
Although these requirements are fairly broad, you should consider applicants with specific skills vital to the role. For example an ideal candidate could have:
- Solid knowledge of finance and tax obligations e..g. accountant, tax advisor
- Knowledge of tax and accounting e.g. company director
How Do I Appoint?
Internally, the public officer is usually appointed by passing a resolution at a directors meeting. A company usually also requests the Public Officer to give their written consent to taking on the role.
Externally, the company must write a letter to the Commissioner of Taxation. In this, they will specify the name and address of the chosen public officer.
If you register your company with Lawpath, we can provide you with many helpful documents including a Public Officer letters to the Commissioner of Taxation. To learn more, read here.
When Do I Appoint?
It is desirable to do so as soon as the business opens. Ultimately, you have up to 3 months since the business began trading or became “in business” to appoint one.
When Might I Appoint a New Public Officer?
There are some situations in which the role of public officer becomes vacant. For example:
- Death
- Resignation
- Personal bankruptcy
- No longer residing in Australia
- Mental state makes them incapable of performing the role
- Failure to do their duties as public officer according to the business’ constitution
Regardless of why the public officer left the role, the business must inform the ATO within 28 days, and thereby appoint a new one.
Conclusion
If you’re a company starting to earn income or carrying business in Australia, it’s likely that under Australian taxation law you need to appoint a public officer, amongst many other obligations. This individual, upon satisfying specific criteria, is the company’s representative to the ATO. They are tasked with ensuring the company meets all its tax and financial obligations under the Income Tax Assessment Act. After the ideal candidate is chosen, they should be formally appointed according to the legally binding timeframe and process outlined above.
For more information provided by the ATO, read this factsheet.
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