If your business cannot pay its BAS, lodge it on time anyway. Lodging protects directors, because PAYG withholding and GST reported within 3 months of the due date can still be dealt with through administration, restructuring or liquidation if a director penalty notice (DPN) is issued; unreported amounts can only be cleared by payment. Unpaid BAS amounts attract interest, can lead to garnishee notices and legal action, and can become a personal debt for directors.
| If you lodge on time but cannot pay | If you do not lodge |
|---|---|
| The ATO knows the amount and can discuss a payment plan | The ATO can estimate what you owe, and estimated amounts are treated as never reported |
| A DPN for those amounts can be remitted by payment, administration, small business restructuring or liquidation within 21 days | A DPN for amounts not reported within 3 months can only be remitted by payment in full |
| Small business restructuring and safe harbour remain possible, subject to their other conditions | Overdue lodgements can rule out small business restructuring and safe harbour until they are brought up to date |
See lockdown vs non-lockdown DPNs and ATO estimates and DPNs.
Unpaid PAYG withholding, GST and super guarantee charge are all covered by the director penalty regime. If the company does not pay, the ATO can issue each director a DPN, and the director can become personally liable for the same amount. The 21 days on a DPN are calendar days and run from the day the ATO posts the notice. See how to count the 21 days.
Behind with the ATO?
The earlier you act, the more options you have. Book a free 30-minute call with Luke D’Costa, Senior Manager – Debt Strategist. If you have received a director penalty notice, check your deadline with our 21-day DPN calculator.
Book a free 30-minute call Sydney 02 9660 3532 · Brisbane 07 3868 1888
If the business cannot pay its debts as they fall due, directors also need to think about insolvent trading and safe harbour.
Yes. Lodge on time even if the business cannot pay. Reporting PAYG withholding and GST within 3 months of the due date keeps the wider options open if a director penalty notice is issued, and up-to-date lodgements are needed for small business restructuring and safe harbour.
The ATO charges interest on the overdue amount and can take recovery action, including garnishee notices, director penalty notices and legal action against the company.
Yes. Unpaid GST, along with PAYG withholding and super guarantee charge, is covered by the director penalty regime.
Often, yes. Businesses owing $200,000 or less may be able to set one up online. A payment plan does not stop interest or cancel a director penalty notice.
Both are covered by the director penalty regime. Get advice on the company’s overall position rather than choosing which debt to pay, because the real question is whether the business can meet all its debts as they fall due.
Sources: Taxation Administration Act 1953 (Cth) Schedule 1, Division 269; Australian Taxation Office, Director penalty regime (last updated 16 April 2026) and Setting up a payment plan (last updated 1 October 2026). This page is general information, not advice about your circumstances. Last reviewed: 9 October 2026.
Written by Luke D’Costa, Senior Manager – Debt Strategist. Luke has more than 16 years’ experience in insolvency and holds ARITA’s Advanced Certificate in Insolvency.
Reviewed by John Chand, Principal and Registered Liquidator. John has more than 17 years’ insolvency experience. Meet the team.