Director penalty notices explained

For most company directors, the company’s tax debts are the company’s problem. A director penalty notice changes that. It is one of the ATO’s firmer tools, and it can make directors personally liable for certain amounts the company owes.

This guide is general background. If you have received a DPN, speak to your accountant or a qualified adviser immediately, because the timeframes matter.

What a DPN covers

Under the ATO’s director penalty regime, directors can be made personally liable for a company’s unpaid:

• PAYG withholding (tax withheld from employees’ wages).
• Super guarantee charge.
• GST.

The ATO issues a notice to the director before it can recover the penalty personally.

Lockdown and non-lockdown notices

	Non-lockdown DPN	Lockdown DPN
When it applies	Amounts reported on time but unpaid	Amounts not reported within the required time
Options in the notice	Generally available within the timeframe	Generally do not remit the penalty
Timeframe	Generally 21 days from the notice date	Liability already locked in

The options set out in a non-lockdown notice generally include paying the debt or taking certain formal insolvency steps. Which, if any, suits your situation is a question for an adviser.

Weighing it up? You can check your eligibility without any credit check, then decide in your own time whether to go further.

Why lodging on time matters so much

Reporting PAYG withholding and GST on time, even when you cannot pay, is what keeps a potential DPN in the non-lockdown category. It is one of the strongest reasons to lodge every BAS on time, regardless of cash flow.

Where funding fits

If the company is viable and the DPN relates to a debt it can afford to clear with help, paying the debt in full is one way to resolve the notice. ATO debt funding can sometimes do that quickly, with funds paid straight to the ATO at settlement. Property-secured loans from $20k to $5m, with no valuation, are common for larger tax debts.

But funding is not always the answer. If the company cannot trade its way back to health, borrowing against a director’s home to pay a DPN may only move the problem. Get advice before deciding.

What to do if you receive a DPN

1. Note the date of the notice and the deadline.
2. Contact your accountant or adviser the same day.
3. Gather the company’s ATO statement, BAS lodgements and bank statements.
4. Work out whether the company can pay, with or without funding.
5. Make a decision within the timeframe, with advice.

Prevention

• Lodge BAS on time every time.
• Set aside PAYG withholding and GST weekly.
• Pay super with every pay run from 1 July 2026 under payday super.
• Talk to the ATO early if cash flow is tight.

Our guides to ATO debt options and payday super cover the practical side.

Read next

• Received an ATO debt notice: Received an ATO debt notice, garnishee or director penalty notice? What to do first, how payment plans and funding compare, and why timing matters.
• ATO debt loans: ATO debt loans clear a business tax debt so it stops growing with interest. When a loan beats a payment plan, and how unsecured and secured options compare.
• ATO debt options for small business: Your options for dealing with an ATO debt: payment plans, funding, remission requests and getting lodgements up to date, and how to choose.
• ATO payment plan vs business loan: ATO payment plan vs business loan to clear a tax debt: costs, interest charges, approval, cash flow impact and when each option makes more sense.
• Payday super and your cash buffer: Payday super starts 1 July 2026, moving super payments from quarterly to every pay run. What it means for cash flow and how to plan your funding buffer.

A quick glossary

• BAS: the business activity statement used to report and pay GST, PAYG withholding and other amounts to the ATO.
• PAYG withholding: tax withheld from wages and other payments, which the business passes on to the ATO.
• Personal guarantee: a promise by a director or owner to repay a business debt if the business does not.
• Payday super: the requirement from 1 July 2026 for employers to pay super at the same time as wages.

Five things to confirm with any lender

• What will this cost in total, not just per week?
• Are there establishment, line or exit fees?
• Can the term be extended if a sale or refinance is delayed?
• Which assets or properties are being used as security?
• How quickly can the facility be closed if I no longer need it?

Getting advice alongside funding

Before committing, run the plan past your accountant or bookkeeper. They can check that the amount matches the real need, that the repayments fit your cash flow forecast and that nothing in your tax position will cause a surprise. If property or guarantees are involved, everyone signing should understand what they are agreeing to, and some may want independent legal advice.

The short version

• DPNs can make directors personally liable for company tax amounts
• They cover PAYG withholding, super guarantee charge and GST
• Non-lockdown notices generally allow 21 days to act
• Lodging on time is the best protection

What happens when you enquire

After you enquire, a real person picks up your details and calls to talk through the purpose, the timing and how the money will be repaid. Unsecured funding is assessed mainly on bank statements and turnover. Property-secured funding is assessed on the property, with no valuation required, and interest can be prepaid or added to the loan. You see the total cost before you commit, and the credit check only happens once you decide to proceed. If the timing is tight, tell us the deadline on the first call so the work can be planned around it.

Funding or another fix?

Good borrowing has a job and an end date. Before you enquire, write down in one sentence what the money is for and how it will be repaid. If that sentence is easy to write, you are probably in the right place. If it is not, it is worth a closer look at the business’s cash flow before taking on new repayments.

A simple preparation list

A short checklist before you send the enquiry. None of it takes long, and together it heads off the most common causes of delay:

• Know the amount you need and what it will pay for.
• Check your recent bank statements so nothing in them surprises you.
• Note any loans, leases or payment plans the business is carrying.
• If you own property, know who is on the title and what is owed.
• Make sure every director or co-owner knows you are applying.

A quick word on the enquiry form

Late surprises are what slow funding down. A second property owner nobody mentioned, turnover that is lower in the statements than on the form, an amount that doubles after the first call: each one sends the assessment back to the start. If you tell us the full story at the beginning, even the awkward parts, the file only has to be worked through once.

Take the next step

If funding could help, let us know the details. Enquiring runs no credit check, your information stays with one team, and a real person will talk you through what fits. Please answer each question honestly and precisely, particularly the amount, turnover and whether you own real estate, so we can match you properly from the start.