Director Penalty
Notice FAQs

A DPN is a formal notice the ATO must give a director before starting proceedings to recover a director penalty for certain unpaid company PAYG withholding, net GST or Superannuation Guarantee Charge (SGC) liabilities.

The DPN does not create the personal liability. That liability arises before the notice is issued because the relevant company liability has not been paid on time.

The 21-day period starts when the ATO gives the DPN. For a posted notice, that is when it is posted, not when it arrives or you open it.

For practical purposes, work from the date printed on the DPN while the actual giving date is checked. It is not 21 business days.

No. The 21-day deadline is set by law.

An agreement with the ATO for more time to pay does not give you more time to have a voluntary administrator or Small Business Restructuring practitioner appointed, or to begin winding up the company, to remit a non-lockdown penalty.

The DPN deadline continues while you negotiate a repayment arrangement or ask the ATO to review the amount.

Late delivery or an old address does not, by itself, invalidate a DPN or give you another 21 days.

The ATO can send the notice to an address that ASIC information indicates is, or was within the previous seven days, your residential or business address.

Not receiving a notice sent in accordance with those rules does not make it invalid.

Keep your ASIC records current and act before the DPN period expires.

After the 21-day period has expired, the ATO may start proceedings to recover an unpaid director penalty from you.

These are parallel liabilities: a payment applied to one reduces the corresponding liability by the same amount (subject to how the ATO allocates the payment). The ATO cannot recover the same underlying amount twice.

Recovery may include court action, garnishee notices or, through a separate legal process, bankruptcy.

There may still be options to deal with the debt after the DPN period expires. Any plan needs to consider both the company’s and the director’s affairs.

The DPN does not create a director’s personal liability for the company’s tax debt.

Directors can become personally liable when the company fails to make its required payments of PAYG withholding, net GST and Superannuation Guarantee Charge (SGC).

The DPN is the notice required before the ATO can start proceedings to recover the penalty from you.

Yes. The ATO can estimate unpaid PAYG withholding, net GST or Superannuation Guarantee Charge and issue a DPN based on the estimate.

If the estimate is wrong, the company can provide corrected reporting and supporting records and ask the ATO to reduce or withdraw it.

Challenging an estimate does not extend the DPN’s separate 21-day period. That deadline still needs to be considered as part of the process.

Lockdown and non-lockdown DPNs

The terms “lockdown” and “non-lockdown” are commonly used in practice. The distinction matters because it determines whether an insolvency appointment can remit the director penalty.

A single DPN can contain both lockdown and non-lockdown amounts.

Each amount must be checked separately.

Non-lockdown DPNs

For PAYG withholding and assessed net GST, a penalty will generally remain non-lockdown to the extent the relevant liability was reported or notified within three months after its payment due date but was not paid.

The reporting test for superannuation depends on when the liability arose:

• For most SGC liabilities relating to quarters ending before 1 July 2026, the company needed to lodge its SGC statement within one month and 28 days after quarter end. Some older liabilities follow different rules.
• For SGC for a qualifying earnings day (QE day, generally a payday) on or after 1 July 2026, the company generally needs to lodge a voluntary disclosure statement by the relevant deadline. See the superannuation FAQ below.

For a non-lockdown amount, the penalty may be remitted if, within the 21-day period, the company:

• pays the debt in full;
• appoints a voluntary administrator;
• appoints a Small Business Restructuring practitioner; or
• begins to be wound up.

Each option has different consequences, so ensure you get appropriate advice.

An ATO repayment arrangement does not, by itself, remit a director penalty.

Lockdown DPNs

For PAYG withholding and assessed net GST, a director penalty will generally be locked down to the extent the relevant liability was not reported or notified within three months after its payment due date.

For most SGC liabilities relating to quarters ending before 1 July 2026, lockdown can apply if the company did not lodge its SGC statement within one month and 28 days after quarter end. Some older liabilities follow different rules.

For SGC for a QE day on or after 1 July 2026, lockdown can apply if the company does not make a voluntary disclosure by the required deadline. See the superannuation FAQ below.

Appointing an administrator, restructuring practitioner or liquidator does not remit a locked-down penalty.

This is why reporting on time matters, even when the company cannot pay.

Options may still be available to deal with lockdown penalties, but they require consideration of both the company and the director’s personal position.

Yes, but lodging or reporting now does not automatically remove a director’s personal liability.

How late the liability was reported affects whether the related penalty is lockdown or non-lockdown. Lodging after the applicable reporting deadline does not reverse an existing lockdown penalty.

This should be discussed with a professional to work out a plan to resolve the debt.

The reporting deadline is different from PAYG withholding and net GST.

Quarterly debts before 1 July 2026: the company generally needed to lodge its SGC statement within one month and 28 days after quarter end to preserve remission options. Some older liabilities follow different rules.

Payday Super from 1 July 2026: an accurate voluntary disclosure statement, in the approved form, must be lodged no later than 60 calendar days after the relevant payday and before the day the ATO makes an assessment for that payday. An earlier assessment shortens the disclosure period.

Late or incomplete reporting can leave all or part of the director penalty locked down.

Yes. The company can pay the debt, or you can pay your director penalty.

These are parallel liabilities: a payment applied to one reduces the corresponding liability by the same amount.

However, do not assume a payment to the company’s ATO account will reduce the amounts in your DPN.

The ATO has discretion in allocating payments.

Before making a payment, ensure you understand how the ATO will allocate it.

Yes, the ATO may agree to let the company pay over time.

But the arrangement does not itself remit your director penalty or extend the 21-day period.

If the arrangement later ends following a default, your unpaid director penalty remains. If the 21-day period has expired, the ATO can pursue you as well as the company.

Yes, for non-lockdown penalties where the timing and other requirements are met.

A voluntary administrator or SBR practitioner must be appointed, or the company must begin to be wound up, within the 21-day DPN period.

Lockdown penalties cannot be remitted through these appointments. The appropriate course of action will depend on the financial circumstances of both the company and the individual director.

Tip: lodge and report on time, even if the company cannot pay. Timely reporting helps preserve remission options.

More information on options

Small Business Restructuring · Voluntary administration · Creditors’ voluntary liquidation

Yes. Deregistration does not remove an existing director penalty, and the ATO can still issue a DPN after the company has been deregistered.

If you receive a DPN and your company has been deregistered, an urgent court application may be needed to reinstate it so the relevant appointment can take effect within the 21-day DPN period.

Reinstatement does not extend that period.

Liquidation, voluntary administration or SBR can still be used to deal with the company’s debt.

However, those appointments do not remit a lockdown penalty. Any plan also needs to address the director’s personal liability and financial position.

Yes. Resigning does not remove an existing director penalty, and the ATO can still issue a DPN after you resign for the period of your directorship.

Yes. You can become personally liable for relevant debts that were overdue before your appointment.

A penalty for those overdue amounts can arise at the end of 30 days after your appointment if the company has not paid them in full, appointed a voluntary administrator or SBR practitioner, or begun to be wound up.

Resigning during those 30 days does not avoid the liability.

This is separate from a DPN’s 21-day period.

It is important to do your due diligence before accepting a director role with any company.

Yes. Each liable director can be pursued for the full unpaid amount—not simply an equal share.

The ATO cannot collect the same underlying amount twice.

A payment credited to the company debt or one director’s related penalty reduces the other linked liabilities by the same amount (subject to how the ATO allocates payments).

Yes. If you pay a director penalty, you have legal rights to seek reimbursement from the company and a contribution from other directors liable for it. Seek legal advice if relevant.

Yes, where the facts support a recognised defence. These include:

• Illness or another good reason made it unreasonable for you to take part in management, and you did not take part during the relevant period.
• You took all reasonable steps to get the company to pay or enter an appropriate insolvency process, or no reasonable steps were available.
• For certain GST and SGC penalties, the company took reasonable care and applied the law in a way that could reasonably be supported.

Simply leaving the finances to an accountant or another director is not enough by itself. Seek legal advice if relevant.

Yes. If your director penalty remains payable and unpaid, ATO recovery action may ultimately lead to bankruptcy.

Receiving a DPN does not itself make you bankrupt. Bankruptcy requires a separate legal process.