No. An ATO payment plan does not cancel a director penalty. A non-lockdown penalty is only remitted if, within 21 days of the notice, the company pays the amount, appoints a voluntary administrator, appoints a small business restructuring practitioner, or begins to be wound up. A payment plan reduces the penalty only as payments are made, and if the plan fails, the ATO can recover the balance from you personally.
A payment plan can still be useful. It spreads the debt over time, it can keep the ATO from taking further action while it is kept, and every payment reduces both the company’s debt and your penalty. It tends to suit a company that is still viable and can meet the instalments as well as its current tax, super and other bills.
The risk is relying on a plan when the company cannot realistically keep to it. If it defaults after the 21 days have passed, the options that would have remitted the penalty may be gone.
| Payment plan | Small business restructuring | Voluntary administration | Liquidation | |
|---|---|---|---|---|
| Remits a non-lockdown DPN if started within 21 days? | No | Yes | Yes | Yes |
| Who controls the company? | Directors | Directors, with a restructuring practitioner | The administrator | The liquidator |
| What happens to the debt? | Repaid in full, plus interest | Creditors vote on a restructuring plan | Creditors decide the company’s future, which may include a deed of company arrangement | The company is wound up |
| Eligibility | At the ATO’s discretion | Conditions apply, including total liabilities and up-to-date lodgements | Open to any company | Open to any company |
Read more about small business restructuring, voluntary administration and how to choose between them.
For lockdown amounts, only payment in full remits the penalty, so a payment plan is one way of reaching that point. You remain personally liable for the balance until the last instalment is paid, and a formal appointment will not change that.
Received a DPN? The 21 days are already running.
Work out your deadline with our 21-day DPN calculator, or book a free 30-minute call with Luke D’Costa, Senior Manager – Debt Strategist.
Book a free 30-minute call Sydney 02 9660 3532 · Brisbane 07 3868 1888
No. A payment plan does not remit a director penalty. It can keep the ATO from taking further action while the plan is kept, but you stay personally liable until the amount is paid.
The ATO may still agree to a payment plan. However, once the 21 days have passed, appointing an administrator or restructuring practitioner, or winding up the company, no longer remits the penalty for non-lockdown amounts.
The ATO can pursue the company and recover the director penalty from you personally, for example by garnishee notice, by offsetting credits owed to you, or through court proceedings.
Yes. A payment plan does not stop the ATO issuing a DPN for amounts that remain unpaid.
Sources: Taxation Administration Act 1953 (Cth) Schedule 1, Division 269, including sections 269-25, 269-30 and 269-40; Australian Taxation Office, Director penalty regime (last updated 16 April 2026). This page is general information, not advice about your circumstances. Last reviewed: 9 October 2026.
Written by Patrick Loi, Managing Principal and Registered Liquidator. Patrick has more than 20 years’ experience in corporate restructuring and insolvency and founded Greengate Advisory. Meet the team.