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

A director penalty notice (DPN) is a letter from the ATO telling a company director they are personally liable for the company’s unpaid PAYG withholding, GST or superannuation guarantee charge. With a non-lockdown DPN, the director can usually avoid the penalty if, within 21 days of the date on the notice, the company pays the debt or appoints a voluntary administrator, liquidator or small business restructuring practitioner. With a lockdown DPN, which usually applies when the company lodged late, an appointment generally no longer removes the director’s personal liability.

The 21 days generally run from the date printed on the notice, not the day you open it, so time may already be short. What you can do depends on the type of DPN, which debts it covers and whether they were lodged on time. Below we explain how DPNs work, how to tell lockdown from non-lockdown, and what directors can do at each stage.

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. The 21 days run from the day the ATO posts the notice, and weekends and public holidays count: how to count the 21 days.
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.

DPN guides

• Lockdown vs non-lockdown DPNs
• How to count the 21 days
• Does a payment plan cancel a DPN?
• What happens if you ignore a DPN
• Defences to a DPN
• DPN after resigning as a director
• New directors and the 30-day rule
• Small business restructuring and DPNs
• Voluntary administration and DPNs
• Liquidation and DPNs
• ATO estimates and DPNs
• Super DPNs after Payday Super

Who can help in Sydney and Brisbane

Greengate Advisory is an Australian restructuring and insolvency firm led by registered liquidators. We advise company directors on director penalty notices and the company tax debts behind them. Our offices are in Sydney (Suite 2, Level 32, 31 Market Street, Sydney NSW 2000, (02) 8318 3699) and Brisbane (Suite 5GB, Level 5, 199 George Street, Brisbane QLD 4000, (07) 3868 1888), and we act for companies across Australia. The first consultation is free and confidential, in English, Mandarin, Cantonese or Korean. Contact us or email info@ggadvisory.com.au.

Related guides

• Can’t pay your debts? See which deadlines are running and how the options compare.
• Insolvent trading: when directors become personally liable for company debts, and the defences.
• Safe harbour: how directors are protected while they pursue a genuine turnaround.
• Your options: every guide, grouped by the situation you are facing.

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. DPN after resigning as 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. New directors and the 30-day rule.

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. ATO estimates and DPNs.

Does a payment plan stop a DPN?

No. It can stop further action while you keep to it, but it does not remit the penalty. Only the four options above do, and only within the 21 days. Does a payment plan cancel a DPN?

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. DPN defences explained.

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. Liquidation and DPNs.

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 reported PAYG withholding or GST for a listed period more than three months after its due date, or not at all, or did not report super guarantee charge by its due date, that amount is locked down. One notice can include both. Lockdown vs non-lockdown DPNs explained

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. An unpaid court judgment of $10,000 or more can lead to a bankruptcy notice. See what happens if you ignore a DPN. See liquidation vs bankruptcy for how personal liability works. If the company itself has been served with a demand, see statutory demands.

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. Small business restructuring and DPNs.

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.