Director Penalty Notice (DPN) Help and Resolution Services
Expert Support for Directors Facing ATO Penalty Notices
If you’ve received a Director Penalty Notice (DPN) from the Australian Taxation Office (ATO), it means the ATO believes your company has failed to meet its tax obligations, such as PAYG withholding, GST (Goods and Services Tax), or Superannuation Guarantee Charge (SGC) payments.
A DPN makes company directors personally liable for certain unpaid company taxes, meaning you may be required to immediately pay the outstanding amount or take specific legal steps within a strict timeframe.
At Restructure Partners, our qualified team works alongside registered Small Business Restructuring Practitioners to help directors understand their legal responsibilities, respond within the relevant period, and explore options that may help resolve unpaid tax debts in compliance with Australian law.
Understanding Director Penalty Notices
A Director Penalty Notice is issued when the ATO determines a company has not met its tax payment or reporting obligations.
It can apply to PAYG withholding, SGC liabilities, or GST debts that remain unpaid after their due date.
The ATO uses DPNs to hold directors personally responsible for ensuring the company pays employee-related taxes and superannuation. There are two main types:
1. Non-Lockdown DPN
Issued when Business Activity Statements (BAS), Instalment Activity Statements, and Superannuation Statements are lodged on time but not paid.
Directors have 21 days from the notice date to take action — such as paying the debt, entering a payment plan, or appointing a voluntary administrator or Small Business Restructuring Practitioner.
2. Lockdown DPN
Issued when the company fails to lodge required statements within the prescribed timeframe. In these cases, the director remains liable for the full director penalty amount, even if the company later enters liquidation or administration.
Each DPN outlines the type of debt, the relevant period, and the outstanding amount owed.
What to Do When You Receive a DPN
If you’ve received a DPN, it’s critical to act quickly.
Ignoring a DPN can lead to legal recovery proceedings, garnishee notices, or court orders against your personal assets.
Here’s what to do immediately:
Confirm the Notice Details
Verify the accuracy of the penalty notice, including the company’s ABN, reporting periods, and amounts stated as payable.
In some cases, discrepancies may exist due to tax credits or amended returns.
Determine Your Company’s Financial Position
Review whether your company complies with reporting and payment obligations and assess whether a payment arrangement or formal restructuring process is viable.
Engage a Professional Early
Seek professional advice from a qualified restructuring practitioner or tax agent immediately. Acting within the 21-day timeframe may allow you to reduce exposure and explore compliant alternatives such as a Small Business Restructure or voluntary administration.
Options Available to Company Directors
Depending on the company’s financial position, directors may be able to take one of the following steps within the 21-day window:
Pay the Outstanding Tax Debts
If the company can pay its unpaid liabilities, full or partial repayment within the timeframe can discharge the director’s personal liability.
Enter a Payment Plan with the ATO
For companies that can trade profitably but need time to catch up, a payment arrangement negotiated directly with the ATO may be appropriate. Directors should ensure the company meets future obligations during this plan.
Appoint a Voluntary Administrator or Small Business Restructuring Practitioner
Entering a formal insolvency process may stop further enforcement action and provide an opportunity to restructure the company’s debts under ASIC and ATO supervision.
Seek Advice on Other Legal Remedies
Where necessary, directors may obtain legal advice regarding parallel liability, fellow directors’ responsibilities, or the impact of personal guarantees and financial institutions’ claims.
Common Causes of DPNs
DPNs are commonly issued where companies:
- Have unpaid company taxes such as PAYG, GST, or SGC;
- Fail to lodge Business Activity Statements or superannuation statements by the due date;
- Have a history of director’s non-participation in company management;
- Have superannuation debts or unpaid employees’ wages;
- Do not take reasonable steps to ensure the company complies with tax obligations; or
- Experience prolonged financial difficulties without seeking restructuring assistance.
Understanding these causes can help directors identify and address issues early to avoid further legal recovery proceedings.
DPNs and Small Business Restructuring
In some cases, directors who receive a non-lockdown DPN may be eligible to appoint a Small Business Restructuring Practitioner (SBRP) to manage company tax debts through a compliant restructuring plan.
This allows the company to propose a restructuring proposal statement to creditors, maintain ordinary business operations, and avoid immediate liquidation where possible.
Directors should note:
- The company must meet the eligibility criteria for the SBR process.
- Tax lodgements and employee entitlements must be current.
- The company continues trading only under the oversight of a registered practitioner.
This can provide a structured path forward for companies with underlying tax debt that are still commercially viable.
Consequences of Inaction
Failure to act on a DPN can result in:
- Personal enforcement of the director penalty amount;
- Issuing of garnishee notices over directors’ wages or bank accounts;
- Court proceedings or bankruptcy actions;
- Additional interest and penalty charges applied to unpaid liabilities.
If there are multiple directors, each director personally becomes liable for the entire period covered by the DPN, not just a portion of the debt.
New and Resigning Directors
A new director can become personally liable for existing unpaid company taxes if those debts remain unreported or unpaid 30 days after their appointment.
Resigning from the board does not remove liability for periods in which the director held office.
Directors should therefore ensure all tax obligations and superannuation payments are met before resigning.
How Restructure Partners Can Help
Assessment of the DPN to determine lockdown status and available legal options
Professional advice on your company’s financial position and potential restructuring solutions
Assistance preparing payment arrangements or restructuring proposals
Collaboration with registered Small Business Restructuring Practitioners to guide directors through the process
Confidential, Australia-wide support
⚖️ Legal and Compliance Notice
Information on this page is general in nature and does not constitute personal financial, legal, or taxation advice. Restructure Partners Pty Ltd Lead Generation Australia PTY LTD operates in accordance with applicable Australian taxation and insolvency laws and regulatory guidance. All formal restructuring or insolvency services are delivered by, or under the supervision of, a Registered Small Business Restructuring Practitioner (ASIC Reg. No. 561447). Directors should seek independent professional advice before acting on any information provided.