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ATO Debt Collection
You have received a Director Penalty Notice
This is the ATO attempting to make you personally liable for 100% of your company’s tax debt. Not a share of it. The full amount, and your personal assets including the family home are in the firing line.
The clock started the day the ATO posted it, not the day you opened it. It cannot be extended. But if within 21days of the notice you do 1 of 4 things you may be able to avoid the transfer of the debt to you personally and then deal with the company debt separately
Send us the notice and we will tell you where you stand today.
Free, confidential, and no obligation.The four actions that can stop the debt becoming yours
If you have a non-lockdown notice, one of the following must occur within 21 days for the penalty to be remitted. Nothing else counts.
Pay the debt in full
The company pays, or you pay personally. Refinancing against property equity is the usual funding route where equity exists.
Appoint a Small Business Restructuring Practitioner
Available to eligible companies. The only option where you stay in control of the company and keep trading while a plan is put to creditors.
Appoint a voluntary administrator
You hand control of the company to an administrator.
Appoint a liquidator
The company is wound up and ceases trading.
A payment arrangement is not on this list
This is the most expensive misunderstanding in the whole area. An ATO payment plan governs how the company repays the debt. It does not remit a director penalty and it does not stop the 21 days from expiring. Directors regularly negotiate a plan, feel relief, and discover weeks later that they are personally liable for the full amount anyway.
Doing nothing is a decision. On day 22, the penalty becomes enforceable against you personally and the ATO can garnishee your personal bank accounts and wages, offset your personal tax refunds, and bankrupt you.
Not sure which action fits your company?
We will tell you in one call which options are actually open to you.What to do in the next 48 hours
Send us the notice
Diarise day 21 before you do anything else.
Identify the type
We will identify the type of notice you have Check whether each amount listed relates to a lodged or unlodged period.
Confirm your ASIC details and check for other notices
Notices can be sitting at an old address. Check your personal ATO portal.
Prepare to Lodge
But speak to us now to review your position.
Get the full picture of the company debt
Not just the DPN amount. The DPN covers PAYGW, GST and SGC only.
Speak to our team before day 15
An SBR appointment cannot be done overnight and eligibility has to be established first.
Day 15 is the practical deadline, not day 21.
Start the conversation now while every option is still open.How a Small Business Restructure stops a DPN
For a non-lockdown DPN, appointing a Small Business Restructuring Practitioner within the 21 days is one of the four actions that remits/cancels, the director penalty. It is the only one of the four that lets you keep control of the daily operations of the company and keeps the business trading.
Once the practitioner is appointed, affected creditors including the ATO cannot start or continue recovery action without the practitioner’s consent or the court’s approval. The company then puts a plan to creditors proposing to pay a portion of admissible debt, typically over one to three years. The whole process runs to a legislated timetable of roughly 35 business days.
To be eligible for an SBR, a company generally needs
Total liabilities under $1 million, excluding employee entitlements- Tax lodgements up to date, (they can be brought up to date during the appointment period)
- No restructuring or simplified liquidation by the company or its directors in the past seven years
- Not already in liquidation or voluntary administration
If you have a lockdown DPN
An SBR does not remit a lockdown penalty. What it can do is deal with the company’s overall debt, keep the business trading and generating income, and, where the plan provides for payment of the underlying liability, reduce or extinguish the amount left standing against you personally as that liability is paid. The strategy is different, and it needs to be worked through with your specific numbers.
Find out in 60 seconds whether your company qualifies.
Most directors who think they are out of options are not.What is a Director Penalty Notice?
A Director Penalty Notice is a written notice issued by the Australian Taxation Office that attempts to make a company director personally liable for unpaid GST, PAYG withholding and super.
The notice is sent by ordinary post to your home address as it appears on the ASIC company register. It is not sent to your accountant at the registered office, and it is not sent to the company’s principal place of business. If you have moved recently, or the address on the register is wrong for any reason, there is no defence. In the eyes of the law and the ATO the notice has been sent to the correct address, because the ASIC register address is the one they are required to use.
Points that catch directors out
- Every director at the time the liability arose is liable for the full amount. Not a share of it. The full amount, jointly and severally.
- It does not matter whether you were involved in running the business. If your name was on the ASIC register, you are liable.
- New directors get a grace period. A newly appointed director generally becomes liable for pre-existing amounts 30 days after appointment if the liability is still unpaid and unreported. Resigning does not remove liability for amounts that arose while you were a director.
The three debts a DPN can cover
Company income tax is excluded from the DPN regime.
PAYG withholding
Net GST
Superannuation Guarantee Charge
Lockdown DPN vs non-lockdown DPN
The two notices look almost identical on the page. What separates them is whether the company lodged on time, not whether it paid.
Non-lockdown DPN
Issued where the company lodged its BAS, IAS or SGC statements within the required time (90 days after the due date) but did not pay the resulting liability.
Because the company reported within time, the law preserves your ability to have the penalty reversed, provided you take one of four actions within 21 days of the date of the notice.
Lockdown DPN
Issued where the company failed to lodge within the required time – within 90 days of the due date of the relevant BAS.
The personal liability is already locked in when the notice is issued. Appointing a liquidator, a voluntary administrator or a restructuring practitioner will not remit it. Only payment of the underlying liability removes it.
The lodgement timeframes that decide which notice you get
- PAYG withholding and GST: the return must be lodged within three months of its due date.
- Superannuation Guarantee Charge: the SGC statement was not lodged by its due date, which is 28 days after the end of the relevant quarter. The super window is far shorter and far less forgiving than the PAYGW window, which is why unpaid super is the most dangerous DPN exposure of the three.
You can receive both types at once, covering different periods and different tax types. Read every notice separately. A common scenario is a lockdown notice for older unlodged super and a non-lockdown notice for recent lodged-but-unpaid PAYGW.
| Feature | Non-lockdown DPN | Lockdown DPN |
|---|---|---|
| Triggered by | Lodged on time, did not pay | Did not lodge within the required time, did not pay |
| Can it be remitted by an appointment? | Yes, if you act within 21 days | No |
| Deadline | 21 days from the date of the notice | Liability already applies |
| Does liquidation clear it? | Yes, if the appointment is made in time | No, it survives liquidation |
| Outcome if ignored | ATO recovery against you personally | ATO recovery against you personally |
Not sure which type of notice you are holding?
Send it through and we will tell you today.The 21-day clock starts on the date of the notice
On a non-lockdown DPN the 21 days runs from the date printed on the notice, being the date the ATO posted it to your ASIC-registered address. It does not run from the day it landed in your letterbox, and it does not run from the day you got back from leave and opened it.
By the time a director physically has the notice in hand, it is common to have between 10 and 16 days left. There is no discretion to extend the period and no appeal against the deadline.
If your ASIC address is your old home, your former accountant’s office, or a property you no longer visit, a DPN can expire without you ever seeing it. Update your ASIC address today if it is not current.
Why the ATO sent you a DPN
DPNs are not random and they are rarely the first contact by the ATO. A notice usually follows some combination of overdue lodgements, a defaulted payment arrangement, a period of no engagement, or a debt that has simply sat too long.
What has changed is volume. The ATO has moved firmly out of its post-pandemic leniency period and DPNs are now issued in the 10,000’s each year rather than the hundreds.
Assume that a DPN means your file is in active collections, and that further action including garnishee notices, credit reporting and winding up proceedings is on the table.
Commonly asked questions
Can I be liable if I have resigned as a director?
Yes, for liabilities that arose while you were a director. Resignation is not an escape route.
Does a payment arrangement stop a DPN?
No. A payment plan does not remit a director penalty and does not pause the 21 days.
Does bankruptcy clear a director penalty?
A director penalty is generally a provable debt in bankruptcy, but bankruptcy also disqualifies you from managing a company. It is a last resort, not a plan.
Can I dispute a DPN?
There are limited defences, including that you did not take part in management due to illness, or that you took all reasonable steps to have one of the required actions taken. These are narrow and evidence-heavy. Get advice quickly rather than relying on one.
What if I never received the notice?
The notice is validly given when posted to your ASIC-registered address. Not receiving it does not stop the penalty.
Can two DPNs arrive for the same company?
Yes, frequently. Different periods and different tax types are assessed separately.
Can DPN’s be given to multiple Directors?
Yes, frequently. The ATO is seeking payment of the Company debt from all available sources.
Get advice before the clock runs out
Small Business Restructuring Specialists is Australia’s leading independent SBR practice. If a DPN has arrived, the fastest way to understand your options is a free eligibility check or a confidential call.
Check your eligibility Call 1300 947 465Reviewed by Thomas Dawson, Registered Liquidator, Small Business Restructuring Specialists. Last reviewed September 2026. This page is general information only and does not take your circumstances into account. Liability limited by a scheme approved under Professional Standards Legislation.