This article has been updated and is current as of 7 April 2022
A Director Penalty Notice (DPN) is a Notice issued by the Australian Tax Office (ATO) that can make you as a Director, held personally liable for the tax debts of your company. The ATO is currently warning tens of thousands of Directors to take action on company tax debts or face the risk of full enforcement action via DPNs. In this article, we provide a brief overview of frequently asked questions on Director Penalty Notices.
Q: Which debts are captured under the DPN regime?
For tax periods from 1 April 2020 onwards, personal liability is captured for:
- pay as you go (PAYG) withholding and superannuation
- goods and services tax (GST)
- wine equalisation tax (WET)
- luxury car tax (LCT)
Q: What happens if a Director Penalty Notice is Issued?
It depends on the type of DPN. There are two types the ATO issues:
- Non-lockdown DPN—issued when statements are lodged (within three months of the due date) but debts are unpaid.
- Lockdown DPN—issued where statements have not been lodged (within three months of the due date) and debts are unpaid.
Q: What are the Options for dealing with a Non-lockdown DPN?
To remit the penalty issued under a non-lockdown DPN, you as a Director must consider the following to avoid personal liability:
- To place the company into liquidation.
- To place the company into administration.
- To appoint a small business restructuring practitioner and commence the small business restructuring process.
- For the company to pay its debt obligations to the ATO in full.
Q: What are the Options for dealing with a Lockdown DPN?
You can only remit Lockdown DPN options by paying the amount in full.
Q: How long do Directors have to Act?
As a Director, you have 21 days from the date of notice to act accordingly—not from when you receive the DPN.
If you would like help with DPNs, contact our team of experienced accountants and lawyers by submitting an online enquiry form or by calling us on 1300 QUINNS or +61 2 9223 9166 to arrange a teleconference or appointment.