What Is a Director Penalty Notice and What To Do in 21 Days
Director Penalty Notice
Company directors · ATO firmer action · Personal liability
A director penalty notice, or DPN, can turn unpaid company PAYG withholding, GST and super guarantee charge into a director's personal liability. This guide shows how to count the 21 days, identify lockdown and non-lockdown amounts, understand what a payment plan does and does not do, gather the right documents, choose the right advisers, and decide whether finance is appropriate for a genuinely viable company. General information only, not legal, tax, insolvency or financial advice.
Quick Answer
A director penalty notice (DPN) is an ATO notice that can make a company director personally liable for unpaid PAYG withholding, GST and super guarantee charge. The 21-day period starts when the ATO posts or leaves the notice, not when you open it. Check every amount and period, get legal and insolvency advice immediately, and do not assume an ATO payment plan remits the penalty. Finance may fit only where a viable company can pay the corresponding liability in full and has a credible repayment exit.
What is a director penalty notice?
A director penalty notice, usually shortened to DPN, is a written notice from the Australian Taxation Office that tells a director the ATO may recover certain unpaid company liabilities from them personally. The regime covers PAYG withholding, GST and the super guarantee charge (ATO, Director penalties, as at 13 July 2026, page last updated 16 April 2026; general information, not legal advice). In plain terms, a company debt can become a director's own debt, which is why the notice should be treated as urgent. For the underlying term, see our note on a director penalty notice, and on a director's guarantee, which is a separate route to personal liability.
The liability is what the law calls a parallel liability. The director's liability mirrors the company's, so a payment made against either the company debt or the director penalty reduces both by the same amount, and where there is more than one director each is likely to owe the same amount rather than a share of it. The ATO's own worked example makes it concrete: on a $4,000 unpaid PAYG withholding liability, each of two directors is liable for $4,000, and a $1,000 payment by either the company or one director reduces every parallel liability by $1,000 (ATO, Director penalties, as at 13 July 2026). The rules sit in Division 269 of Schedule 1 to the Taxation Administration Act 1953, which is the legal basis for everything that follows. This guide keeps to plain English and links to the ATO's own page and the legislation rather than quoting the sections at length.
Can you become personally liable before a DPN arrives?
Yes. A director penalty can arise before the paper notice reaches you. Under Division 269 of Schedule 1 to the Taxation Administration Act 1953, liability can arise when the company has not met the relevant obligation by the due day. The DPN is the written notice the ATO must give before it can take action to recover the director penalty, and the ATO can recover 21 days after the notice is given (ATO, Director penalties, as at 13 July 2026). This means overdue company tax and super are director-risk issues before an envelope arrives, not only after.
Warning signs to act on before a DPN: overdue PAYG withholding, GST or super guarantee charge; BAS, IAS, GST returns or super guarantee statements that have not been lodged; a defaulted or fragile ATO payment arrangement; repeated ATO recovery contact; or an ASIC address that is no longer current. None proves a DPN is coming, but each is a reason to reconcile the account and get advice before the options narrow.
Keeping reporting current matters because it can preserve wider remission routes for PAYG withholding and GST. Super guarantee charge has a stricter reporting test: the super guarantee statement's own due date is what matters. Ask your accountant or tax agent to check every liability and period separately rather than treating the ATO balance as one number.
When does the 21-day DPN period start?
The 21-day DPN period starts when the ATO posts or leaves the notice, not when you receive, open or read it. The ATO's guidance is explicit that the 21 days starts on the day it posts the DPN or leaves it at the address registered with ASIC, and that if no address is registered with ASIC it will use the address last known to it (ATO, Director penalties, as at 13 July 2026; timing is strict and this is not legal advice). A notice can therefore already be several days into its life before it reaches you.
The practical step that follows is simple and costs nothing: keep your ASIC-registered address current, so a notice cannot run against you before you have even seen it. If a notice has arrived, or you have heard one is coming, treat it as urgent from that moment and get advice on the specific notice, because it is a legal document with a fixed and short life.
What should you do first after receiving a DPN?
First, work out the real deadline and separate every amount and reporting period on the notice. Then gather the underlying records and get tax, insolvency and legal advice before deciding whether the company should pay, restructure, enter administration, wind up or consider finance. Do not start with a loan application and do not assume the notice is solved because the company has an ATO payment plan.
The first 48 hours
- Find the date the notice was given and calculate the real deadline. Keep the full notice and any envelope or delivery record. The 21 days run from when the ATO posts or leaves the notice, not when you read it, so assume the clock is already running.
- Separate every amount and every period. One DPN can cover two or more penalties, and the same notice can contain both non-lockdown and lockdown amounts. Do not label the whole notice from one line item.
- Gather the records in the checklist below. Your advisers need the notice schedule, ATO accounts, lodgment history, super records, any payment arrangement and current financial information to work out what is owed, what was reported and whether the company is viable.
- Call your accountant or tax agent, an insolvency practitioner and a lawyer today. The accountant reconciles tax and lodgments; the insolvency practitioner assesses viability and formal options; the lawyer advises on the notice, defences and personal exposure.
- Confirm the status of any ATO payment arrangement, and treat the notice as unresolved. A plan is not one of the remission actions and does not stop the 21-day period, so the notice must still be dealt with on its own terms. Ask an adviser to confirm exactly what the arrangement covers.
- Only then test whether finance fits. Finance cannot remove a DPN. It may fund paying the corresponding company liability in full, but only where the company is genuinely viable, there is sufficient security and there is a credible way to repay or refinance.
| Document or information | Why it matters | Who will use it |
|---|---|---|
| The complete DPN and any envelope or delivery record | Shows the amounts, periods, stated issue details and the notice wording used to calculate the deadline | Lawyer, accountant and insolvency practitioner |
| ATO integrated client account, activity statement account and notice schedule | Reconciles the debt on the notice to the company's current ATO position | Accountant or tax agent |
| BAS, IAS and GST return lodgment history | Shows whether each PAYG withholding or GST amount was reported within the relevant timeframe | Accountant, lawyer and insolvency practitioner |
| Super guarantee statements, payroll reports and super payment records | Shows whether SGC statements were lodged by their due dates and what remains unpaid | Accountant, lawyer and insolvency practitioner |
| Any ATO payment arrangement, including current balance and compliance status | Confirms what the arrangement covers and whether it is current; the notice still needs its own response | Accountant, lawyer and ATO contact |
| Current management accounts, cashflow forecast, aged payables and aged receivables | Tests whether the company can pay debts as they fall due and whether the problem is temporary or insolvency-related | Insolvency practitioner and, later, a lender |
| Current ASIC address details | Checks where the ATO was permitted to send the notice and prevents future notices going to an old address | Lawyer, accountant and company officeholder |
| Property, mortgage and exit information, only if finance is being considered | Tests available equity, existing security and how a short-term facility would be repaid or refinanced | Finance broker and lender, after viability advice |
Quick guide: which path are you on
For each amount and period on the notice, was the reporting deadline that applies to that liability met?
Likely non-lockdown for this amount
If the applicable reporting deadline was met, this amount is more likely to retain the wider remission routes. For PAYG withholding and GST, reporting within three months of the due date generally preserves those routes. For super guarantee charge, lodging the super guarantee statement by its due date is the critical reporting point. Within the DPN period, a non-lockdown penalty may be remitted by paying the corresponding company liability in full, appointing a voluntary administrator, appointing a small business restructuring practitioner, or beginning to wind the company up. Confirm the treatment of the actual amount with your advisers.
This amount may be locked down
If PAYG withholding or GST was reported more than three months after the due date, or not reported, that amount may be locked down. For super guarantee charge, lodging the super guarantee statement after its due date, or not lodging it, can produce the locked-down outcome, and estimated amounts are treated as never reported. In that case, appointing an administrator or restructuring practitioner, or beginning to wind the company up, does not remove that part of the personal penalty; paying the corresponding company liability in full is generally the remaining remission route. One notice can contain both outcomes, so read every amount separately.
General information only, not advice. The reporting test is not identical for every liability, and the exact outcome can be affected by the notice, assessments, estimates, lodgment history and any applicable concessions. Use this as a question list for your accountant, lawyer or insolvency practitioner, not as a substitute for advice on the notice.
What is the difference between a non-lockdown and lockdown DPN?
A non-lockdown amount retains several possible remission actions within the notice period; a lockdown amount can generally only be remitted by paying the corresponding company liability in full. The distinction depends on the reporting history for each liability, not the size of the debt. PAYG withholding and GST use a three-month reporting test, while super guarantee charge turns on whether the super guarantee statement was lodged by its due date.
| How they differ | Non-lockdown DPN | Lockdown DPN |
|---|---|---|
| How it arises | For PAYG withholding and GST, the amount was reported within three months of the due date (for a new director, within three months of appointment). For super guarantee charge, the super guarantee statement was lodged by its due date. | For PAYG withholding or GST, the amount was reported more than three months after the due date or remains unreported after three months. For super guarantee charge, the statement was lodged after its due date or was never lodged. Estimated amounts are treated as amounts that were never reported. |
| What can remit the penalty | Pay the corresponding company liability in full, appoint a voluntary administrator, appoint a small business restructuring practitioner, or begin to wind the company up, within the notice period | Generally, only paying the corresponding company liability in full |
| Can administration, restructuring or winding up remit it? | Potentially yes, if the action is taken within the notice period and the amount is genuinely non-lockdown | No, those appointments do not remove the locked-down personal penalty |
| Practical read | Acting quickly opens several exits, so timing is everything | The exit is narrow, so getting insolvency and legal advice immediately matters even more |
The reporting tests and the remission options above are set out on the ATO's Director penalties page (as at 13 July 2026; this is general information, so confirm the current wording and get advice on your own notice, which is a legal document). The takeaway is blunt: a non-lockdown notice gives you real choices inside the window, while a lockdown notice generally leaves paying in full as the only way to lift the personal penalty.
A quick way to see the PAYG withholding and GST timing test in practice: if a business activity statement is due on 28 October, the three-month point is 28 January. Reporting the amount on 30 January may leave that amount locked down; reporting it within the period can preserve the wider remission routes even if the company cannot yet pay. This example does not apply the same three-month rule to super guarantee charge: SGC has its own statement-due-date test (ATO, Director penalties, as at 13 July 2026).
There is also a third case worth knowing. Because different amounts can be reported on different timelines, a single director can face a lockdown outcome on one period and a non-lockdown outcome on another, on the same notice or on two notices issued together. Read each amount and each period on your notice separately, since one part may still have the four exits open while another is already locked down, and the right response can differ by amount (ATO, Director penalties, as at 13 July 2026).
What can you do within the 21-day DPN period?
For a non-lockdown amount, four actions may remit the director penalty within the notice period: pay the corresponding company liability in full, appoint a voluntary administrator, appoint a small business restructuring practitioner, or begin to wind the company up. A payment arrangement is not a fifth remission action. For a lockdown amount, paying the corresponding company liability in full is generally the remaining remission route.
Actions that can remit a non-lockdown penalty
- Pay the company's outstanding liability in full
- Appoint a voluntary administrator to the company
- Appoint a small business restructuring practitioner
- Begin to wind the company up
Actions that do not remit the penalty
- Entering an ATO payment arrangement for the company debt
- Promising to pay, or starting to pay, without one of the four steps
- Waiting for the notice to arrive in the post
- Assuming an adviser or a fellow director has handled it
That second list holds the correction worth reading twice. Entering an ATO payment arrangement for the company debt is not one of the four actions, so on its own it does not remit the director penalty or stop the 21 days running (ATO, Director penalties, as at 13 July 2026; the remission options listed there are the four above, and a payment arrangement is not among them). A payment plan can still be sensible for managing the underlying company debt, it just does not, by itself, deal with the personal penalty. Where the real question is how to finance the company's tax debt, our guide on ATO tax debt and finance covers that ground, and the section on where finance fits below is honest about when paying in full is even the right move.
Does an ATO payment plan stop or remit a director penalty?
No. An ATO payment arrangement for the company debt does not remit the director penalty, does not turn a lockdown amount into a non-lockdown amount, and does not stop the 21-day notice period from running. The ATO's guidance lists exactly four remission actions, and a payment arrangement is not among them (ATO, Director penalties, as at 13 July 2026).
Part of the confusion is historical. The ATO's own enforcement practice statement records that before 1 July 2010 there were specific powers to enter payment agreements with companies under provisions that have since been repealed, and older commentary that still circulates reflects that earlier regime (ATO, PS LA 2011/18, Enforcement measures used for the collection and recovery of tax-related liabilities and other amounts, as at 13 July 2026). That is not the current position, which is why a director who was told years ago that a plan solves the problem needs to look again now.
The practice statements also cut against any assumption that an arrangement quietly freezes everything. The ATO records that negotiating payment of a debt does not of itself prevent it from prosecuting breaches of the tax laws or from securing the debt where it sees a risk to revenue, that an instalment arrangement can sometimes be accepted without legal action being deferred, and that tax credits are generally offset against director penalty liabilities unless satisfactory arrangements or security for the underlying company liability support a refund instead (ATO practice statements PS LA 2011/14 and PS LA 2011/21, as at 13 July 2026). A plan can absolutely still be worth having: it manages the underlying company debt, keeps the company engaging with the ATO and may be part of a sensible overall strategy. It is just a separate thing from the notice, and the notice must be dealt with on its own terms, within its own deadline. Ask your adviser to confirm exactly what any arrangement covers, whether it is current, and how it fits with the response to the notice.
| Question | Direct answer |
|---|---|
| Does the payment plan remit the DPN? | No. It manages payment of the company debt but is not one of the four remission actions. |
| Does it stop or pause the 21-day period? | No. The notice period continues to run, so the notice still needs its own response in time. |
| Does it turn a lockdown amount into a non-lockdown amount? | No. The lockdown test turns on when the amounts were reported, not on how the debt is being paid. |
| Is a plan still worth discussing? | Often, yes. It can help manage the underlying company debt and shows engagement with the ATO, but it is separate from dealing with the notice. |
| What should I confirm? | What the plan covers, whether it is current and how it fits your response to the notice. Ask your adviser, and treat the notice as unresolved until a remission action has occurred. |
Customer trap: “I am on a payment plan” and “my DPN has been dealt with” are not the same statement. Ask your adviser to confirm the plan's status, what liabilities it covers, whether every payment has been made on time and what the DPN says about each amount.
Does a director penalty notice cover unpaid super?
Yes. A DPN can make a director personally liable for unpaid super once it is a super guarantee charge. The SGC reporting test is stricter than the three-month rule used for PAYG withholding and GST: for the wider remission routes to remain available, the super guarantee statement must be lodged by its due date. If it is lodged late or never lodged, appointing an administrator or restructuring practitioner, or beginning to wind the company up, does not remit that part of the director penalty; paying the corresponding liability in full is generally the remaining route, and estimated SGC amounts are treated as never reported (ATO, Director penalties, as at 13 July 2026).
This arm of the regime is now more immediate for employers. Since 1 July 2026, Payday Super requires super guarantee contributions to be paid with wages and generally received by the employee's fund within seven business days after payday (ATO, About Payday Super, as at 12 July 2026, page last updated 30 May 2026; check the live ATO guidance for exceptions and transitional rules). For a director worried about DPN exposure, the practical lesson is to monitor both the payment flow and any SGC statement obligation rather than waiting for a quarterly problem to appear.
What defences are available to a director penalty?
The main defences are illness or another acceptable reason for not taking part in management, taking all reasonable steps to have the company comply or enter an available formal process, and, for SGC or GST, a reasonably arguable position taken with reasonable care. They are narrow, fact-specific and have to cover the whole relevant period, so a defence is a reason to get legal advice immediately, not a reason to wait (ATO, Director penalties, as at 13 July 2026).
- You did not take part in the management of the company during the relevant period because of illness or another acceptable reason.
- You took all reasonable steps, unless there were none you could have taken, to ensure the company paid the amount, appointed an administrator or a small business restructuring practitioner, or began to wind up.
- For the super guarantee charge or GST, the company applied the relevant law in a way that was reasonably arguable and took reasonable care in doing so.
Two points cut against a false sense of safety. Relying on someone else, including a fellow director or a professional adviser, is not on its own a defence, a point the ATO ties to decided court cases. And a defence has to cover the whole of the period between when the obligation arose and when the notice expires, not just part of it. There are also review rights, but they are time-limited, broadly within 60 days of receiving a garnishee notice or written notice that the ATO has recovered part of the penalty. Because this is legal territory, the section on getting help below points to where to go, and none of this is legal advice.
How do DPN rules apply to new and resigned directors?
Resigning does not remove liability for amounts connected with periods when you were a director, and a new director can become liable for pre-appointment amounts if the company does not act within 30 days of the appointment. The safest approach is to investigate the company's ATO, lodgment and super position before accepting an appointment, and to get advice before resigning if liabilities already exist.
If you are a new director
- You are generally not liable for penalties that were due before your appointment if the company acts within 30 days
- Acting means paying the debt, appointing an administrator or a restructuring practitioner, or winding up the company
- After that 30 day window, you can become liable for those earlier amounts too
- So the first month is the time to find out exactly what the company already owes
If you have resigned, or are thinking of it
- Resigning does not wipe liability for periods when you were a director
- You remain liable for amounts due before your resignation, and for some amounts that fall due afterwards but relate to periods while you were a director
- Liability can continue even after the company is deregistered
- So resigning is not, by itself, a way out of a director penalty
Both sets of rules are on the ATO's Director penalties page (as at 13 July 2026; these rules are fact-specific and this is general information, not legal advice). If you are joining a company, the practical move is to check its lodgment and ATO position before, not after, you sign on.
Can finance be used to pay the tax debt behind a DPN?
Finance does not remove a DPN; it may only fund paying the corresponding company liability in full. That can be one of the remission actions for a non-lockdown amount and is generally the remaining remission route for a lockdown amount. Finance should be considered only after tax, insolvency and legal advice establishes that paying in full is the right action for a genuinely viable company.
Before looking for a loan, ask the harder customer question: after the DPN liability is cleared, can the company pay its ordinary debts as they fall due without another rescue loan? If the answer is unclear, the next step is a solvency review, not a finance application. Where the company is viable, there is sufficient property equity and there is a credible repayment or refinance exit, property-secured finance may be one way to fund a defined liability in time. The table keeps the product detail secondary to the risk and exit.
| Route | When it may fit | Main risk and required exit |
|---|---|---|
| Second mortgage | Raising a defined amount against available property equity while preserving an existing first mortgage | Adds debt behind the first mortgage and exposes the property; requires sufficient equity and a credible repayment or refinance exit |
| Private lending | A property-backed route where a bank process is unavailable, unsuitable or too slow for the genuine deadline | Pricing and terms reflect speed and flexibility; requires a clear exit and should not be used to keep an insolvent company trading |
| Caveat loan | A fast, short-term property-backed route where the required amount and near-term exit are both clear | Short duration and strong exit dependence; not a long-term solution and can move company risk onto personal property |
If a payment is being made to remit a penalty, the mechanics matter: who pays, from what funds and when can carry legal and tax consequences, including potential preference exposure if the company later enters liquidation, where the ATO's enforcement practice statement notes directors can be liable to indemnify the Commissioner if such a company payment is later held void (ATO, PS LA 2011/18, as at 13 July 2026), and tax questions where company and director positions are mixed, so get legal and accounting advice on how the payment is structured before it is made. Because the liability is parallel, a payment against the company debt reduces the director penalty by the same amount (ATO, Director penalties, as at 13 July 2026). There is a hard limit on all of this, though. Raising finance to keep an insolvent company trading is not the same as funding a viable company to clear a specific liability, and it can breach a director's duty to prevent insolvent trading. Directors have duties under the Corporations Act, including that duty, and ASIC's guidance is to get professional accounting or legal advice as early as possible when a company is in financial difficulty (ASIC, Insolvency for directors, as at 12 July 2026; insolvent-trading and safe harbour rules are fact-specific and this is not legal advice). Finance is for a viable company paying a defined liability in time, not for propping up one that cannot pay its debts.
The carrying cost of the underlying debt belongs in the same decision. Unpaid tax debt accrues the general interest charge, which compounds daily and is 11.43% for the July to September 2026 quarter, and GIC incurred on or after 1 July 2025 can no longer be claimed as a deduction (ATO, General interest charge rates, as at 13 July 2026, page last updated 5 June 2026; ATO, General interest charge, as at 13 July 2026). The cost of any facility depends on the lender, the security and the circumstances, and our guide on ATO tax debt and finance covers that comparison in detail; the point here is narrower, that leaving the debt to drift has a measurable and rising cost, and that cost is part of the viability arithmetic your advisers should see.
The route to think hardest about is securing a company's tax debt against your family home, because the home is then exposed if the plan does not hold. That is a decision for the household and for proper advice, not a quick fix, and it makes sense only where the company is genuinely viable and the exit is real. It also helps to understand the protection position, because these are business-purpose facilities. Business lending generally sits outside the National Credit Act, since the test is the predominant, more than half, purpose of the loan and lending to a company is not consumer credit (ASIC INFO 101, as at 12 July 2026, page last updated 20 October 2020; general regulatory information, not legal advice). ASIC also states that commercial loans carry the lowest level of borrower protection, though laws against unconscionable and misleading conduct and unfair small business contract terms still apply, and a small business with fewer than 100 employees can sometimes take a complaint to AFCA where the lender is an AFCA member (ASIC INFO 207, as at 19 April 2024; AFCA rules govern and access depends on the lender's membership). None of this section is a recommendation, an offer or advice; it is general information about how these facilities are used, and getting insolvency and legal advice on your own notice comes first.
How do you know whether finance is appropriate after a DPN?
Finance is only potentially appropriate where the company is viable, the cause of the tax debt is understood and fixed, reporting is current, the amount and deadline are verified, sufficient equity exists and the repayment exit is credible. If the company cannot pay its debts as they fall due, has no workable cashflow after the DPN is cleared, or needs repeated rescue borrowing, the matter belongs with an insolvency practitioner rather than a lender.
| Question to prove | Evidence of a potentially fundable position | Warning that this is an insolvency matter |
|---|---|---|
| Can the company pay debts as they fall due after the DPN is dealt with? | A realistic cashflow forecast shows ordinary debts, wages, tax and new finance can be serviced | The company still cannot meet ordinary debts without another rescue facility |
| Why did the tax or super debt arise, and what has changed? | A specific, evidenced cause has been corrected, with controls that prevent the same arrears rebuilding | No coherent explanation, no operational change, or the debt is still increasing |
| Are all lodgments current and reconciled? | BAS, IAS, GST and SGC records are current, and every amount on the DPN can be matched to source records | Returns or statements remain unlodged, estimates are unresolved or the actual liability is unknown |
| Is the funding request exact? | The verified amount, deadline, payment destination and professional advice are clear | The request is framed only as “make the DPN go away” without reconciling the debt or options |
| Is there sufficient equity and a credible exit? | Current property values, mortgage balances and a realistic refinance, sale or cashflow exit support the request | Little real equity, disputed ownership, no household agreement or no credible way to repay |
From broking practice, general observations
General observations from Switchboard broking practice, not an assessment of any application and not a statement of what any lender will do. These are qualitative and vary by lender and by circumstances, and the broker's role here sits alongside your accountant and insolvency practitioner, not in place of them.
- What tends to get a director penalty deal declined: no coherent account of how the debt arose or of the company's path back to viability; lodgments that are not up to date, since an unlodged activity statement is the harder problem and is what pushes an amount toward lockdown; no real equity or no credible exit; or a request framed as borrowing to make the notice go away rather than funding a viable company to pay a specific liability in full and in time.
- What a lender reads first: whether the company is genuinely viable or whether this is really an insolvency matter, the ATO integrated client account position and whether lodgments are current, and the equity and the exit.
- Why property-secured routes appear on these deals: they are generally assessed on equity and a clear exit rather than trading history, which is why they can be available where an unsecured lender has declined. That is a structural observation about how the routes work, not a recommendation.
General observations from broking practice only. They vary by lender and by circumstances, they are not an assessment of any application, and they are not advice. Every application is assessed on its own facts.
The practical point is that preparation and honesty move faster than optimism here: current lodgments, a clear account of the debt, and a real exit tell a lender the problem is being managed. If enforcement has already started, our map of the first days after an ATO garnishee notice goes deeper, and the second mortgage option carries its own detailed guide.
What happens if the 21 days expire or the ATO escalates?
After the 21-day notice period, the ATO can take action to recover the director penalty personally if it has not been remitted. There is no point at which an unremitted director penalty simply lapses: the 21 days is the end of the remission window, not the end of the liability, so recovery can commence at any time afterwards. Depending on the circumstances, that can include offsetting your tax refunds or credits against the penalty, firmer action such as garnishee notices and credit-reporting disclosure, and legal action. Bankruptcy is a possible later consequence, not an automatic step (ATO, Director penalties, as at 13 July 2026; ATO, Firmer action we may take, as at 12 July 2026, page last updated 5 January 2026).
| Stage | What it means | What to do |
|---|---|---|
| Notice is posted or left | The 21-day period starts then, even if you have not opened or received the notice | Calculate the deadline immediately and preserve the notice and delivery details |
| Inside the 21 days | The available remission actions depend on the treatment of each amount; mixed notices are possible | Reconcile every amount, get legal and insolvency advice and choose the right action before the period expires |
| A payment arrangement is in force | The plan manages the company debt, but it is not a remission action and the notice period still runs | Confirm the plan's coverage and status with your adviser, and still deal with the notice within the window |
| The 21 days expire | If the penalty was not remitted, the ATO can take action to recover it from you personally | Do not wait for the next letter; get legal and insolvency advice on the recovery position immediately |
| Firmer action | The ATO may use offsets, garnishees, disclosure or legal proceedings, and unresolved personal debt can ultimately contribute to bankruptcy proceedings | Respond to the specific enforcement step with the appropriate legal, insolvency and tax advice |
This is the point where speed matters most, and where a specialist response, not a loan, is usually the first move. We keep the detailed tactics to a separate resource rather than repeat them here: our map of the first 72 hours after an ATO garnishee notice sets out a realistic sequence. The one thing that rarely helps is doing nothing, because each further step narrows the options.
What do non-lockdown and lockdown DPN scenarios look like?
These two illustrative scenarios show why the same words “I received a DPN” can lead to very different next steps. The first turns on current reporting, viability, equity and a real exit; the second shows why finance is not a substitute for insolvency advice when reporting is late and the company cannot sustainably pay.
Who should you call after receiving a director penalty notice?
Call the adviser who answers the next decision, not the person who is easiest to reach. A DPN crosses tax, insolvency and legal issues. A finance broker belongs later in the sequence, after the company has been assessed as viable and paying in full has been identified as the right action.
| Person or service | What they establish | When to contact them |
|---|---|---|
| Accountant or registered tax agent | Reconciles the ATO accounts, identifies each liability and period, checks BAS, IAS, GST and SGC reporting, and confirms any payment arrangement | Immediately, with the full notice and account records |
| Registered liquidator, restructuring practitioner or specialist insolvency adviser | Assesses solvency, viability and whether restructuring, administration or winding up should be considered | Immediately, before taking on new debt or assuming the company can trade through |
| Lawyer experienced in tax recovery or insolvency | Advises on the notice, service, defences, recovery action, personal asset exposure and the legal consequences of each option | Immediately, particularly where the deadline, notice validity, a defence or enforcement is in issue |
| ATO, often with or through your adviser | Confirms the account, arrangement and administrative position; contact does not itself remit the DPN | Promptly, once the notice and account have been reconciled and you know what needs to be asked |
| Finance broker | Tests whether a verified payment-in-full strategy is fundable from sufficient security with a credible exit | Only after viability and the right legal or insolvency path have been assessed |
| Small Business Debt Helpline and National Debt Helpline | Provide free, confidential support and help you organise the next steps when financial pressure is overwhelming | At any point, especially if cost or stress is stopping you from seeking help |
The practical standard is simple: the accountant establishes the numbers, the insolvency practitioner establishes whether the company has a viable future, the lawyer establishes the legal position, and only then does a broker assess funding. ASIC advises directors to get professional accounting or legal advice as early as possible where a company may be unable to pay debts as they fall due (ASIC, Insolvency for directors, as at 12 July 2026). A broker worth talking to will sometimes say not to borrow. Moneysmart's guidance on managing debt is a good, independent starting point while you work out which path applies.
What do directors usually ask after receiving a DPN?
After the deadline and DPN type, directors usually search for the personal consequences: whether they can pay over time, whether their home is exposed, whether resignation helps, what co-directors owe and what happens if the company cannot pay. These answers are deliberately direct, but each depends on the facts and should be checked with your own advisers.
A director penalty notice is the ATO's written notice that certain unpaid company PAYG withholding, GST and super guarantee charge may be recovered from a director personally. The 21-day period starts when the notice is posted or left, not when it is opened. Each amount must be checked separately because one notice can contain both non-lockdown and lockdown outcomes, and the reporting test for SGC turns on its own statement due date rather than the three-month test used for PAYG withholding and GST. An ATO payment arrangement does not remit the DPN or stop the clock, so the notice must be dealt with on its own terms. Finance is not a remedy; it is only a possible way to fund payment in full where professional advice supports that action for a genuinely viable company with sufficient security and a credible exit. Count the real deadline, reconcile every amount, establish viability and get tax, insolvency and legal advice before choosing the response.
Key takeaway: a DPN is a deadline-and-diagnosis problem before it is a finance problem. Work out when the notice was given, classify every amount, confirm any payment arrangement, and get the right advisers around the same records immediately.If your accountant, insolvency practitioner and lawyer have established that the company is viable and paying the corresponding liability in full is the right action, tell us the verified amount, deadline, available security and proposed exit. You will get a straight answer about whether finance appears to fit, including when the better answer is to stay with insolvency or legal advice.
Frequently Asked Questions
A director penalty notice (DPN) is a written ATO notice that can make a company director personally liable for unpaid PAYG withholding, GST and super guarantee charge. The notice allows the ATO to pursue the director personally after the statutory notice period if the penalty has not been remitted. Treat it as a legal and insolvency matter and get advice immediately.
Calculate the deadline from when the ATO posted or left the notice, separate every amount and period, gather the notice, ATO accounts, lodgment and super records, and contact your accountant or tax agent, an insolvency practitioner and a lawyer immediately. Confirm the status of any payment arrangement, and consider finance only after the company has been assessed as viable and paying in full is the right action.
The 21-day period starts when the ATO leaves or posts the notice, not when you receive, open or read it. A notice sent to an ASIC-held address can therefore already be running before it reaches you. Keep the notice and delivery details, calculate the deadline immediately and get legal advice if service or timing is in issue.
A non-lockdown amount can retain several remission actions within the notice period, including payment in full and certain formal insolvency appointments. A lockdown amount can generally only be remitted by paying the corresponding company liability in full. PAYG withholding and GST use a three-month reporting test, while super guarantee charge turns on whether the super guarantee statement was lodged by its due date, so check every amount separately.
No. An ATO payment arrangement is not one of the remission actions, so it does not remit the director penalty, does not turn a lockdown amount into a non-lockdown amount, and does not stop the 21-day notice period. The ATO's Director penalties guidance lists exactly four remission actions, and a payment arrangement is not among them, as at 13 July 2026. A plan can still be a sensible way to manage the underlying company debt, but treat the notice as unresolved until one of the remission actions has occurred, and ask your adviser to confirm exactly what the plan covers.
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