Director Penalty Notice (DPN)
Director Penalty Notice (DPN) is a notice issued by the Australian Taxation Office under Division 269 of Schedule 1 of the Taxation Administration Act 1953 that makes a company director personally liable for unpaid PAYG withholding, superannuation guarantee charge, or GST net amounts. Once a DPN is issued, the director must act within 21 days to avoid personal liability becoming irrevocable — typically by paying the debt, entering a payment arrangement, or placing the company into administration or liquidation.
Why It Matters
A DPN turns a company tax debt into a personal problem. If a director doesn't respond within 21 days, the ATO can pursue them personally — including garnishing wages, freezing bank accounts, or registering a charge against personal property. This is one of the most common urgent triggers for private lending, caveat loans, and second mortgage funding in Australia.
How It Works
- The ATO issues a DPN to the director(s) of a company with overdue PAYG, super, or GST obligations.
- The director has 21 days to respond — by paying the debt in full, entering a compliant payment arrangement, appointing an administrator, or beginning to wind up the company.
- If the obligation was reported late (more than 3 months overdue), a lockdown DPN applies — payment or payment arrangement is the only way out.
- If no action is taken, the penalty becomes irrevocable and personally enforceable.
Common Use Cases
- Directors who need to pay an ATO debt within 21 days to avoid personal liability
- Businesses using caveat loans or private lending to fund urgent ATO payouts
- Second mortgage funding to clear accumulated PAYG or super debts
- Business owners restructuring debts after receiving a DPN
Related Switchboard Resources
For official DPN information, visit ato.gov.au.