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Director Penalty Notices

Everything You Need to Know About Director Penalty Notices (DPNs)

Understand and Respond to Notices from the ATO

A Director Penalty Notice (DPN) is a powerful tool used by the Australian Taxation Office (ATO) to hold company directors personally liable for unpaid company tax debts.

If you’re a director and your company owes PAYG withholding, GST or superannuation, you could receive a DPN. Choosing to ignore it can lead to significant personal financial consequences.

At Equinox Restructuring & Insolvency, we help directors act quickly and confidently when served with a DPN, minimising their liability and protecting personal assets.

What Is a Director Penalty Notice?

A DPN is a formal notice issued by the ATO to a company director, making them personally liable for specific unpaid company tax debts.

There are two types of DPNs:

Non-Lockdown DPN

  • Applies if company lodgements were made on time, but payments were not
  • Directors have 21 days from the date of the notice to act
  • Options include paying the debt, placing the company into voluntary administration, liquidation or appointing a small business restructuring practitioner

Lockdown DPN

  • Applies if company BAS or SGC statements were not lodged within required timeframes

  • Directors are automatically liable and cannot avoid personal liability through insolvency appointments

  • The only way to avoid liability is to pay the debt in full

What Debts Do DPNs Cover?

  • PAYG Withholding (employee tax)
  • Superannuation Guarantee Charge (SGC)
  • Goods and Services Tax (GST)

If these debts are unpaid and lodgements are late, directors face automatic personal liability under a lockdown DPN.

Who Can Receive a DPN?

  • Current directors
  • Former directors (in some cases, if debts were incurred during their term)
  • Newly appointed directors (after a 30 day grace period)

What to Do if You Receive a DPN

  1. Act immediately – The 21 day window is fixed and strictly enforced
  2. Check the type of DPN – Lockdown or non-lockdown?
  3. Seek urgent advice – Professional input is critical to understand your exposure
  4. Consider your options:
     
    • Repay the debt in full
    • Appoint an administrator or liquidator (non-lockdown DPNs only)
    • Explore a Small Business Restructuring (SBR) solution

Failing to act means the ATO can pursue you personally – even after the company is wound up.

How We Help at Equinox Restructuring & Insolvency

  • Assess your exposure under a DPN

  • Advise on insolvency options to avoid liability (if available)

  • Implement Small Business Restructuring solutions fast

  • Work with your accountant or lawyer to respond promptly

We help directors take immediate and informed action.

Received a DPN? Don’t Delay.

Time is critical. If you’ve received a DPN or think one may be coming, get in touch now for fast, confidential advice.

Arrange a cost and obligation free consultation.

FAQ’s

Frequently Asked Questions

How long do I have to respond to a DPN?

You have 21 days from the date on the notice (not when you receive it) for a non-lockdown DPN. For lockdown DPNs, liability is automatic.

In limited cases. But the best protection is to act quickly and explore formal restructuring or insolvency options.

Yes. The ATO can pursue one or all directors for the full amount.

You have 30 days from your appointment to place the company into external administration before the personal liability attaches.

No. Safe harbour protects against insolvent trading liability, but does not apply to DPNs. However, it may still be part of a broader strategy.

Generally yes, but the ATO can escalate quickly once the DPN period has expired.

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