Australian-Wide · ATO Debt Specialists

A Director Penalty Notice makes company tax debt personal

Once a DPN is issued, the ATO can pursue you — not just the company — for unpaid PAYG, super and GST. There's usually a 21-day window to act, and what you do inside it decides what happens to your personal assets.

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Which type of DPN have you received?

Three quick questions — under 2 minutes. The answer decides which options are still open to you.

There are two types of Director Penalty Notice — and only one of them can be dealt with by restructuring or winding up the company. Knowing which one you're holding is the first step.

No details needed to see your result

What you're actually holding

What a Director Penalty Notice really means

Normally, company debts belong to the company. A DPN is the ATO's legal mechanism for cutting through that protection — it makes you, the director, personally liable for specific unpaid company tax obligations.

It covers PAYG, super and GST

DPNs apply to unpaid PAYG withholding, superannuation guarantee charge, and GST — the amounts a company holds on behalf of employees and the ATO.

Your personal assets are exposed

Once the penalty crystallises, the ATO can recover it from you personally — through garnishee notices, offsetting your personal tax refunds, or court proceedings.

The clock starts at the date on the notice

The 21 days run from the date the ATO issues the notice — not the day it lands in your letterbox. Notices are sent to the address on your ASIC record, so directors often lose days without knowing it.

The one mistake that makes it worse

Ignoring it. A DPN doesn't lapse or get negotiated away by waiting — after 21 days your options narrow to paying or being pursued personally. Payment plans alone do not cancel the penalty.

"Directors are personally liable for their company's unpaid PAYG withholding, GST and super guarantee charge. A Director Penalty Notice is the step that lets the ATO recover those amounts from the director personally."

ADR

Director Penalty Regime · Division 269, Schedule 1 TAA 1953

Check your notice

There are two types of DPN — and the difference matters

The type you've received decides whether restructuring or winding up the company can remove your personal liability, or whether only payment can. Most directors don't know which one they're holding.

Type 1 · Non-lockdown

The 21-day DPN

Issued when the company lodged its BAS and returns on time (or within 3 months of the due date) but didn't pay. This is the notice where fast action changes everything.

You have 21 days from the date on the notice to act
The penalty is remitted (cancelled) if, within those 21 days, the company pays the debt or enters a formal process
Appointing a Small Business Restructuring practitioner, voluntary administrator or liquidator inside the window may remit the penalty, so it doesn’t become your personal liability
After 21 days, the penalty locks in and the ATO can pursue you personally

Type 2 · Lockdown

The lockdown DPN

Issued when the company's lodgments were more than 3 months late (or SGC statements weren't lodged in time). The penalty is already "locked" to you personally the moment it's issued.

There is no 21-day escape window
Liquidation or administration does not remove the personal liability
Payment of the underlying debt is the only way to clear the penalty itself
The company’s own debts and future can still be dealt with. Call us and we’ll confirm the notice type and talk through the company’s options. For your personal position, we’ll point you to the right adviser.

Not sure which one you've got? The date-lodged history on your BAS decides it — use the 2-minute checker above or send us the notice and we'll tell you same day.

Inside the 21 days

Your options while the window is open

For a non-lockdown DPN, the law gives you four ways to deal with the penalty inside the 21 days. Two of them, most directors have never heard of.

Pay the debt in full

Clears the penalty completely. Simple — if the money exists. For most directors staring at a six-figure ATO debt, it doesn't.

Note: a payment plan alone no longer cancels the penalty — a common and costly misunderstanding.

Most don't know this

Small Business Restructure (SBR)

Appointing an SBR practitioner within the 21 days may remit the penalty under a non-lockdown notice, while you keep control of the company, keep trading, and put a plan to creditors to settle the debt for less than the full amount.

For eligible companies with liabilities under $1 million. Details below.

Voluntary administration

Appointing an administrator inside the window also remits the penalty — but an external administrator takes control of the company while the process runs.

Liquidation

Winding the company up inside the window remits a non-lockdown penalty too. It ends the business — usually the last resort, but sometimes the honest answer.

Remember: liquidation does not remove liability under a lockdown DPN.

The cost of waiting

Acting this week vs next month

With a DPN, time isn't just money — it's the difference between the debt staying the company's problem or becoming yours.

Inside the 21 days

Act while the window is open

Every option is still on the table — pay, restructure, administer or wind up
An SBR appointment may remit the personal penalty and, if creditors accept the plan, may reduce the company debt too
You stay in control of the business throughout an SBR
Creditor recovery action is paused once a formal process starts
You choose the path — not the ATO

After the window closes

Wait and see

The penalty crystallises — company debt becomes your personal debt
Restructuring or liquidating no longer removes your liability
The ATO can garnishee wages and bank accounts, or start court recovery against you
Your family home and personal assets come into the picture
The ATO chooses the path — not you

The option that keeps your business

Why directors with a DPN look at an SBR first

A Small Business Restructure is a federal government process (introduced 2021) that deals with the DPN and the underlying debt in one move — without closing the doors.

The penalty may be remitted

Appointing the practitioner inside the 21-day window may remit a non-lockdown director penalty, which can take the DPN off your personal plate.

The debt may be reduced

Creditors, including the ATO, vote on the restructuring plan. If they accept it, the company may repay part of what it owes over an agreed period. Outcomes depend on your circumstances and the creditor vote.

You stay in control

Unlike administration or liquidation, no one takes your keys. You run the business day-to-day while the practitioner manages the creditor side.

Eligibility at a glance

Total company liabilities under $1 million, tax lodgments up to date, employee entitlements paid, and no SBR or simplified liquidation in the past 7 years. Over $1 million or not eligible? There are still options — a free assessment maps them for you.

Free & confidential

Holding a DPN? Don't lose days to doubt.

Send us the notice or book a free 15-minute assessment. We'll confirm which type you're holding, how many days you have left, and exactly which options are still open — same day.

Free · Confidential · No obligation