What is a Director Penalty Notice (DPN)?
The ATO issues a Director Penalty Notice to hold company directors personally liable for specific unpaid tax and super debts. It is designed to ensure directors cause their companies to lodge and pay on time. A DPN does not close your company; it compels directors to take action within a strict timeframe.
Key facts:
- The 21‑day deadline starts from the date on the letter, not receipt.
- Notices are sent to each director’s ASIC‑registered address. Keep ASIC details current.
- Multiple directors can be jointly and severally liable.
- New directors can become liable if they do not cause compliance within 30 days.
What debts does a DPN cover and who is liable?
DPNs apply to unpaid amounts the company owes for:
- PAYG withholding (tax withheld from wages and certain payments)
- Superannuation Guarantee Charge (SGC) arising from late or unpaid super
- GST (and, where relevant, LCT and WET)
Who can be liable:
- Any person who was a director at the time the company was required to lodge and pay.
- New directors, after 30 days from appointment (or the due date, if later) if the company remains non‑compliant.
- Former directors remain liable for the period they were in office. Resignation does not remove existing liability.
If you have outstanding super, submit Superannuation Guarantee Statements promptly—lodgement affects which DPN type applies and your available options.
Non‑lockdown vs lockdown DPN
Non‑lockdown DPN
Issued where required statements (BAS/IAS/SGC) were lodged within 3 months of their due dates, but amounts remain unpaid.
Within 21 days you can remit the director penalty by one of the following:
- Pay the debt in full
- Appoint a Small Business Restructuring Practitioner
- Appoint a voluntary administrator
- Appoint a liquidator
Lockdown DPN
Applies where statements were not lodged within 3 months of the due dates. In this case, entering restructuring, administration or liquidation will not remit the penalty.
Only paying the underlying debt in full clears the director penalty.
Timing traps
The 21‑day period runs from the printed date. Mail delays and negotiations with the ATO do not extend the deadline. Lodge any missing BAS/SGC statements immediately to establish your position.
New directors
New appointees have 30 days to cause compliance. If the company does not lodge and pay within that period, new directors can also become liable under a DPN.
What to do within 21 days
- Confirm which type of DPN you received (non‑lockdown vs lockdown).
- Review lodgement history for BAS/IAS and SGC; lodge any missing statements immediately.
- Obtain a breakdown of PAYG, SGC and GST owing; prioritise super obligations.
- Choose the permitted pathway:
- Pay in full (required for lockdown DPNs).
- Enter small business restructuring, administration or liquidation (only available to remit non‑lockdown DPNs).
- Keep ASIC director addresses current and document your steps and dates.
- Seek professional advice urgently—delays can make you personally liable even if the business later restructures.
Common mistakes to avoid:
- Thinking an ATO payment plan alone remits a lockdown DPN—it does not.
- Relying on the mailing date reaching you—time starts from the printed date.
- Resigning without taking action—resignation does not remove liability.
- Overlooking estimated liabilities—ATO estimates can still support a DPN if statements are missing.
Prevent another DPN and choose the right support
Prevention is about timely lodgement and clear cash‑flow planning around tax and super:
- Lodge BAS and IAS on time—even if you cannot pay in full. Lodgement protects options.
- Pay super quarterly by the due dates and use the ATO clearing house or your super clearing house.
- If super is missed, lodge SGC statements quickly to limit compounding penalties and interest.
- Tighten bookkeeping and payroll processes so PAYG and super are calculated and set aside regularly.
Useful next pages:
- BAS agent services to keep BAS/IAS on time.
- Payroll services to meet PAYG and super deadlines.
- Bookkeeping services to keep records and GST accurate.
- Tax accountant for ATO strategy and negotiations.
- Small business accountant for ongoing support.
- Best Way to Prepare BAS for step‑by‑step BAS process.
Frequently asked questions
What is a Director Penalty Notice?
It’s an ATO notice that can make company directors personally liable for unpaid PAYG withholding, superannuation guarantee charge and GST. You have 21 days from the date on the notice to take permitted action.
What is the difference between lockdown and non‑lockdown DPNs?
Non‑lockdown DPNs apply where statements were lodged within 3 months—pay, restructuring, administration or liquidation within 21 days can remit the penalty. Lockdown DPNs apply where statements were not lodged within 3 months—only payment in full remits the penalty.
Does an ATO payment plan fix a DPN?
For lockdown DPNs, no—only paying the debt in full clears the penalty. For non‑lockdown DPNs, the penalty can be remitted by entering restructuring, administration or liquidation within 21 days (or by paying in full).
Are new directors liable?
Yes. New directors have 30 days from appointment (or from the due date, if later) to cause compliance. If the company remains non‑compliant, they can become liable under a DPN.
How are DPNs served?
By post to the director’s address on the ASIC register. Update ASIC details promptly—the 21‑day period runs from the printed date regardless of delivery time.
What should I do first if I receive a DPN?
Identify the DPN type, review lodgement history, lodge any missing BAS/SGC statements, get a debt breakdown, and take one of the permitted actions within 21 days. Seek urgent professional advice.