QLD My business partner is doing the wrong thing by ATO

[NeedHelp77]

My business partner has been doing the wrong thing by the ATO. He is not declaring the correct information to the ATO and as a result is not paying the correct tax. I have sought multiple advice from different accountants and they have all said to me that our business is not compliant by the ATO. I have explained and forwarded all those emails to my business partner but he insist that their advice are incorrect. All accountants have advised me to reach out to the ATO and get an exemption directly from them as a best way forward. The business partner is refusing to do that. I told him that I would like to contact the ATO (for my side of the business) but he blocked me saying “its a breach of contract” and breach of “privacy”.
My question is: if I contact the ATO then would he be able to sue me? All I am trying to do is be compliant with the ATO, so would the Law protect my business partner and “punish” me for trying to be compliant with the law and “ATO in particular”?

 

[Tim W]

First things first - no, he can't sue you for going to the ATO.

Now....

Is this business a company?
If so, are you a director of this company?
Or are you a mere shareholder?

 

[NeedHelp77]

no, he can't sue you for going to the ATO.

Thank you. I had always thought that no one has the right to stop me from contacting the ATO (the police or any other authority) as and when I see required.
However, the Managing Director who is the main beneficiary of those tax evasion is using the “breach of contract” if I go to the ATO.

yes it is a business and I am one of 4 Directors and I own 20% of the shares.

 

[Tim W]

Chances are, it is part of your Director's duties to disclose misconduct by another Director.

You can probably ignore the "breach of contract" thing.
For a start, you probably don't have one of the kind this person is trying to intimidate you with supposedly breaching.
Ask yourself - contract with whom? Where is it? What are the terms?
Further, no contract can compel a person to do something unlawful.
Just as it cannot compel you to not do something that the law requires you to do.

Also, the "privacy" thing is an utter myth.

Reply to any threats of "legal action" with "Well, go on then."

Further - you say you own 20% of the shares.
Numerically, exactly how many is that?
Has the company the given you an actual a Share Certificate?
Are you receiving dividends in proportion to your shareholding?
Are the Board meetings often (even usually) held without you present?

Where I'm going with this is that you may have seen surface symptoms of a bigger problem.

 

[NeedHelp77]

Chances are, it is part of your Director's duties to disclose misconduct by another Director.

Before I joined the business I sought legal advice as well as advice from accountant(s). The accountants said that the business was not complying with ATO in terms of paying the correct tax. When this matter was discussed with the Managing Director (MD) he said he would make changes to comply with ATO. However, that was over 3 years ago. He (and other directors) took my money which I had to pay to become a shareholder and only then their true colours came out. They are thieves, the business is doggy and surely non compliant with ATO.
In a meeting to discuss the ATO, they (the other directors) joined forces to stop me from contacting the ATO sighting “the company affairs before I joined is non of my business”. As for the company’s affair whilst am being part of it they said “contacting the ATO is not the way forward”. However, two accountants have independently gave advice and both said that the company is not compliant and that the only way around it, is to contact the ATO to get exemption and/or binding ruling. The exact same advice was given by the company’s own accountant. However, the 3 directors are playing the “contacting the ATO is not the way forward” and that “if I contact the ATO then they will sue me for breach of contract and breach of privacy”. It is obvious to me that they are the beneficiaries of not paying the correct tax for over 15 years. I on the other hand might have been part of this for the 3 years of being part of this tax non compliant but I am ready and willing to contact the ATO to make things right as the last thing I want is for the ATO to hold me liable and penalise me for tax evasion. On the other hand, I don’t want to contact the ATO and then be sued by 3 business partners for “breach of contract” or “breach of shareholder agreement”.
Any thoughts?

 

[NeedHelp77]

Further - you say you own 20% of the shares.
Numerically, exactly how many is that?

Out of 200,000 shares, I have 40,000 and so do the other 2 directors. The remaining 120,000 are owned by the 4th Director who is also the Managing Director of the business.
However, the Dividends are equally distributed as per the Shareholder agreement between the 4 partners.
Yes I do have a Share Certificate.

In terms of board meetings, as far as I am aware, they tell me about those meetings so that I attend. However, it has became evident lately that they do hold meetings or at least discussions and emails between the 3 of them without me being part of those discussions or even cc’d into those emails. Those emails that I am not being cc’d in, are usually the ones that one of the shareholder leaks when he is in disagreement with the MD. Those emails are usually targeted and against me and more than likely contains a plot against me.

 

[ArmandoMyers]

I'm sorry to hear about the trouble you're facing with your business partner and the ATO. It's crucial to navigate these situations carefully. Have you considered seeking professional advice on company administration? It could be beneficial to consult with experts who can guide you through the process and help ensure everything is handled properly. Remember, having a solid understanding of company administration can make a significant difference in resolving issues and maintaining a healthy business.