Director penalty notice

Limited liability usually keeps a company’s bills away from the people running it. A DPN is the exception the ATO uses for three specific tax debts, shifting them onto the director as an individual, and it comes with a deadline that starts before the envelope is opened.

Which debts a DPN covers

The penalty equals the company’s unpaid amount of:

• PAYG withholding: tax deducted from employees’ wages but not passed on to the ATO
• GST: the net amount reported on the company’s BAS
• Super guarantee charge: owed when employee super hasn’t been paid correctly

These are treated differently from income tax because, broadly, the company held the money on behalf of someone else. Company income tax itself isn’t covered.

How the 21 days work

The clock starts on the date the notice is issued. The ATO mails it to wherever ASIC’s records say the director lives, and sending it there is enough, whether or not the director actually reads it. Mail delays, an old address or a holiday can eat into the window badly.

What a director can do in that time depends on one thing: whether the company reported the debt on time.

	Reported on time (non-lockdown)	Reported late (lockdown)
When it applies	BAS lodged within three months of the due date (super charge reported on time)	Debt reported late or not at all
Ways to remove the penalty	Payment of the full amount, voluntary administration, small business restructuring, or putting the company into liquidation	Payment of the full amount only
Effect of insolvency steps	Can remit the penalty if taken within 21 days	Don’t remove the director’s liability

That table is why accountants keep telling clients to lodge, even when they can’t pay. Lodging costs nothing and keeps the restructuring options alive.

A worked example

A Brisbane fit-out company with three staff falls behind during a slow winter. It lodges its BAS on time but pays nothing, leaving $38k of PAYG withholding and $24k of GST outstanding. A non-lockdown DPN is dated 3 November for $62k, sent to the director’s home address on ASIC’s register.

The director opens it on 8 November, with 16 days left. Insolvency isn’t the right answer: the business is viable and has $90k of work booked for December. Instead, they arrange a short-term loan secured against their home, which settles on 19 November and clears the $62k. The personal penalty is gone, and the company repays the director’s loan from the December jobs. Run your own figures through our ATO debt calculator.

If you’re holding a DPN now, enquire straight away: time is the scarcest thing you have.

What else directors should know

New directors can become liable for amounts still unpaid 30 days after they’re appointed, so it pays to ask about the ATO account before joining a board. Former directors remain exposed for debts that arose while they were in office.

The regime is also under scrutiny. In September 2026 the Inspector-General of Taxation and Taxation Ombudsman announced a review looking at how fairly and proportionately the ATO issues these notices. The rules keep applying in full in the meantime.

A DPN is a statutory penalty, not a contract, so it’s distinct from a director guarantee you sign for a lender. It can, however, hit the same personal assets. For the full background, read what a director penalty notice means for you, and for funding options see director penalty notice funding.

Need the money inside 21 days?

We hear from directors in exactly this spot, and plenty of them have clean, viable businesses that simply hit a lean patch. Send us the penalty figure, when the notice was issued and any property or assets you could offer as security. It’s roughly a minute of typing, and no credit enquiry is lodged against you for getting in touch. Your details go to one person here, not out to a list of lenders, and that person calls you to work through it. Please be precise about the amount and the notice date; with a deadline this tight, accurate details are what get the right lender lined up first time.

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