Received a director penalty notice (DPN) from the ATO?

A director penalty notice (DPN) means the ATO can make you personally liable for some of your company’s tax debts. You have 21 days from the date the ATO issued the notice – not the date you opened it. Speak to a registered liquidator now, in English, Mandarin, Cantonese or Korean.

What a DPN covers

Unpaid PAYG withholding, GST (including luxury car tax and wine equalisation tax) and super guarantee charge (SGC). The ATO sends DPNs to your address registered with ASIC, so check it is up to date.

Two kinds of DPN: lockdown and non-lockdown

What to do in the 21 days

1. Check the issue date and which periods and amounts the notice lists.
2. Bring lodgements up to date, because late lodgement can remove options on future notices.
3. Get advice on which remission option fits: payment, administration, small business restructuring or liquidation.
4. Act before the deadline. Otherwise, after 21 days the ATO can recover the penalty from you personally, including by garnishee or offsetting your personal tax refunds.

Behind on other ATO debts too? See ATO debt help for company directors.

Common questions

What is a director penalty notice?

A formal ATO notice telling a director they are personally liable for a penalty equal to certain unpaid company tax debts, and how long they have to act.

I resigned as a director. Am I still liable?

Yes, for debts that fell due, or relate to periods, while you were a director.

I have just become a director.

You have 30 days from appointment to make sure pre-existing debts are paid, or an administrator, restructuring practitioner or liquidator is appointed, to avoid becoming liable for them.

Can the ATO issue a DPN for an estimate?

Yes. If the company has not lodged its returns, the ATO can estimate the amount, and director penalties can apply to the estimate.

Does a payment plan stop a DPN?

No. It can stop further action while you keep to it. However, only one of the four options above remits the penalty.

Are there defences to a DPN?

The law allows limited defences, for example where illness or another good reason stopped you taking part in managing the company, or where you took all reasonable steps to make sure the company paid, went into administration or restructuring, or was wound up. So get advice early, because you need evidence to support a defence.

Can I still get a DPN after the company goes into liquidation?

Yes. Liquidation remits a non-lockdown DPN only if it happens within the 21 days. Otherwise you can remain personally liable after the company is wound up.

Is my DPN lockdown or non-lockdown?

Check which periods it lists and when the company lodged each BAS and super guarantee statement. If the company lodged a return for a listed period more than three months after its due date, or not at all, that amount is locked down. One notice can include both.

How does the ATO recover a director penalty?

After the 21 days, the ATO can take court action, issue garnishee notices on your personal accounts, or use your personal tax refunds and credits to pay the penalty.

Can small business restructuring stop a DPN?

Yes, for a non-lockdown DPN: appointing a small business restructuring practitioner within the 21 days remits the penalty. The company must meet the SBR criteria, including total liabilities of $1 million or less.

If there are two directors, are we both liable?

Yes. Each director can receive a DPN for the same debt. However, a payment by one reduces the amount the ATO can recover from the other.

Does safe harbour protect me from a DPN?

No. Safe harbour can protect directors from insolvent trading claims, but it does not stop director penalties. In addition, tax lodgements must be up to date to use safe harbour.

Got a DPN? Talk to a registered liquidator today See our small business restructuring guide.

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This page is general information, not advice about your situation.