What to do when you receive a DPN (step-by-step)
Time matters. The 21‑day deadline runs from the date printed on the Director Penalty Notice, not the date you open the letter. Take these steps immediately:
- Identify the debt and periods: confirm whether it covers PAYG withholding, GST or SGC, and note the amounts and periods listed.
- Check lodgement status: confirm if BAS/IAS were lodged within 3 months of the due date and if SGC statements were lodged by their due date. This distinguishes non‑lockdown vs lockdown DPN.
- Bring lodgements up to date: fast-track outstanding BAS/IAS/SGC to clarify your position and meet prerequisites for options.
- Assess options: - Non‑lockdown DPN: pay in full or appoint a Small Business Restructuring Practitioner (SBRP), Voluntary Administrator (VA) or Liquidator within 21 days to avoid personal liability. - Lockdown DPN: payment of the company debt is generally the only way to remit personal liability.
- Coordinate with the right specialists: your accountant/tax agent plus, if needed, an SBRP, registered liquidator or insolvency lawyer.
- Document everything: keep copies of the notice, proof of lodgements, payments and any appointment resolutions.
If you are unsure which DPN you have, act as if the deadline is today and get professional help to verify quickly.
Types of Director Penalty Notice and who is at risk
Non‑lockdown DPN
- BAS/IAS were lodged within 3 months of their due dates, and SGC statements lodged on time.
- To avoid personal liability, within 21 days you must cause the company to pay in full or appoint an SBRP, VA or liquidator.
Lockdown DPN
- BAS/IAS not lodged within 3 months of their due dates, or SGC statements not lodged by their due date.
- Personal liability is generally only remitted by paying the company debt in full. Appointing an SBRP/VA/liquidator after the deadline will not remit the penalty.
Directors covered
- Current directors and, in some cases, former directors for periods when they were in office.
- New directors can become liable 30 days after appointment if historical debts remain unpaid and unreported.
Related reading: ATO Debt Help and BAS Debt Help for broader strategies that may sit alongside a DPN response.
Choosing the right help (accountant, SBRP, liquidator)
Scope
Confirm who will manage urgent lodgements, interpret the DPN, liaise with the ATO, and coordinate any appointment (SBRP/VA/liquidator). Make sure SGC calculations and BAS adjustments are included if needed.
Software fit
Your provider should be fluent in your accounting platform (Xero, MYOB, QuickBooks) and able to reconcile payroll, PAYG and GST quickly to support accurate lodgements and payments.
Turnaround and communication
Ask for an immediate timetable to meet the 21‑day window. Clarify who signs board resolutions, who talks to the ATO, and how updates are delivered each day.
Commercial fit
Understand fees for urgent work, restructuring or external administration. Compare whether you are aiming to pay in full, restructure via SBR, or wind up, and choose advisors aligned to that path.
Common decisions and next steps
Directors often choose between these paths:
- Pay the company debt in full (possibly with short‑term funding) to resolve both lockdown and non‑lockdown DPNs.
- Enter Small Business Restructuring (SBR) to compromise eligible debts while retaining control (non‑lockdown DPN only, within 21 days).
- Appoint a Voluntary Administrator or Liquidator (non‑lockdown DPN only, within 21 days) where continued trading is not viable.
- If unsure, conduct a rapid solvency assessment to pick the correct path with evidence.
Helpful pages before you make contact: ATO Correspondence Help, ATO Review Help, and the Help Centre.
Frequently asked questions
What taxes does a Director Penalty Notice cover?
Currently, DPNs can make directors personally liable for unpaid PAYG withholding, net GST (including LCT and WET) and superannuation guarantee charge (SGC).
How is the 21-day deadline calculated?
The 21‑day period generally runs from the date on the notice, not the date you receive it. Treat it as urgent and seek help immediately.
What is the difference between a lockdown and non-lockdown DPN?
If required lodgements were made on time (BAS/IAS within 3 months of the due date; SGC statements by their due date), the ATO may issue a non‑lockdown DPN giving options other than payment. If they were not lodged in time, a lockdown DPN can be issued and personal liability is generally only remitted by paying the company debt in full.
Does entering a payment plan with the ATO stop a DPN?
No. A payment plan does not, by itself, remit personal liability under a DPN. It can help pay the company debt. For non‑lockdown DPNs, appointing an SBRP, VA or liquidator within 21 days can also avoid personal liability.
Can new directors be issued a DPN for old debts?
Yes. New directors can become liable if unpaid and unreported PAYG, GST or SGC remain outstanding 30 days after appointment. Act quickly: verify lodgements and take action within that window.
Are there any defences to a DPN?
Limited statutory defences may apply (for example, serious illness preventing management or taking all reasonable steps to ensure compliance). Defences are narrow and evidence‑based, so seek advice quickly.