Director Penalty Notice Lawyers

If you’ve received a director penalty notice from the ATO, you could become personally liable for your company’s unpaid tax debts. Our team of director penalty notice lawyers can quickly determine whether you’ve been issued a lockdown or non-lockdown DPN, explain your options and provide practical strategies to protect your position.

We understand the stress that comes with being personally pursued for company debts. With years of experience in tax disputes and negotiations with the ATO, we help directors manage their risks, raise valid defences, and achieve the best possible outcomes.

What is a director penalty notice?

A director penalty notice (DPN) is a notice issued by the ATO that makes company directors personally liable for unpaid company tax debts, including PAYG withholding, GST and superannuation guarantee charge (SGC).

If these obligations are not met, the ATO can pursue directors individually, even if the company is insolvent.

There are two types of director penalty notices:

Non-lockdown DPN – Issued when the company has lodged its statements on time but has not paid the amounts owing. Directors have 21 days from the date of the notice to cause the company to pay, or to appoint an administrator, restructuring practitioner, or liquidator. If action is taken within this period, the penalty is remitted.
Lockdown DPN – Issued when the company has failed to lodge statements on time. In this case, directors are automatically liable for the unpaid amounts. Placing the company into administration or liquidation will not avoid liability. The only way to resolve the debt is by payment.

Understanding whether your notice is lockdown or non-lockdown is critical, because it determines what options are available to you.

Our director penalty notice lawyers can quickly assess your notice and explain the best strategy for your circumstances.

What happens if you don’t pay your director penalty notice?

If you fail to comply with a DPN within the 21-day period, the ATO can take action against you personally. This may include:

starting court proceedings to recover the penalty;
issuing a bankruptcy notice and applying to make you bankrupt; or
garnisheeing funds directly from your personal bank account or wages.

The consequences are severe and can put your personal assets and financial security at risk. Early advice and decisive action are essential.

Are there any defences to director penalty notices?

Yes, but the available defences are very limited under section 269-35 of Schedule 1 to the Taxation Administration Act 1953 (Cth). You may avoid liability if you can show that:

you were unable to take part in managing the company due to illness or another serious reason;
you took all reasonable steps (or there were none available) to ensure the company paid its debts, appointed an administrator, or was wound up; or
in the case of unpaid SGC, the company reasonably applied the law and took care in doing so.

It is not a defence to say you relied on other directors or advisers to manage tax compliance. The courts expect directors to take an active role in ensuring obligations are met.

How can you avoid a director penalty notice?

Directors can take proactive steps to avoid personal liability for company tax debts.

Before you agree to become a director, it is important to check whether the company already has outstanding PAYG, GST or superannuation guarantee obligations. If those liabilities exist, you may inherit responsibility for them once you are formally appointed.

While acting as a director, the most effective way to avoid a director penalty notice is to ensure the company lodges all statements on time and pays amounts in full by their due dates. Consistent compliance with reporting and payment obligations is the key safeguard against exposure.

Even after resigning as a director, liability can remain. You may still be responsible for debts that fell due before your resignation or for reporting periods that began while you were still a director. This means it is crucial to confirm that the company has met its obligations before stepping down, as resigning alone does not extinguish your liability.

Our director penalty notice lawyers help directors put processes in place to reduce their risks and provide clear advice to ensure you stay compliant and protected.

Protecting Directors, Defending Futures

A director penalty notice can threaten your personal assets and livelihood. We act quickly to challenge liability, negotiate with the ATO, and protect your financial security.

Further Tax Solutions

Why seek advice after receiving a director penalty notice?

A director penalty notice can put your personal assets, income and financial security at risk. The time to act is short — you have only 21 days from the date of the notice to respond, and in some cases liability is automatic.

Clarity

We give you clarity on the type of notice you’ve received and what it means. Knowing whether it’s a lockdown or non-lockdown DPN determines your options and the urgency of your next steps. With clear advice, you can act quickly and avoid mistakes that could cost you personally.

Protection

Our lawyers identify and raise valid defences where available, such as illness, taking all reasonable steps, or the SGC defence. These defences are narrow but, when used correctly, can protect you from personal liability. We ensure your position is put forward strongly and in line with the law.

Solutions

We take the lead in dealing with the ATO on your behalf. This includes negotiating payment terms, disputing liability, or working towards a practical settlement. Having a lawyer negotiate for you not only eases stress but also gives you access to solutions you may not have realised were possible.

Security

Our priority is safeguarding your financial security. Left unchecked, a director penalty notice can lead to bankruptcy, garnishee orders or personal enforcement action. We act fast to reduce these risks, put protective measures in place, and give you confidence that your income and personal assets are being defended.

We’re here to protect your financial position

A director penalty notice can feel overwhelming, but you don’t have to face it alone. Our team provides clear advice, decisive action and strong representation to protect your financial security.

Why choose us to deal with your director penalty notice?

Choosing the right lawyer can make all the difference to the outcome of your director penalty notice matter.

Expert Advice

We provide deep knowledge of the director penalty regime and the ATO’s enforcement powers, giving you clear strategies tailored to your circumstances.

Proven Results

Our team has extensive experience negotiating with the ATO and resolving DPN disputes efficiently, often without the need for lengthy court proceedings.

Personalised Strategy

You will work directly with an experienced lawyer who takes the time to explain your options and guide you through every step of the process.

Swift Action

We act quickly to assess your notice, identify options, and implement solutions, giving you the best chance of reducing risk and protecting your financial security.

Client Testimonials

Stefan and the team at Axe Legal were an absolute lifeline when I received a director penalty notice. Their swift action and expert guidance were invaluable in helping me navigate through this stressful situation. From the moment I contacted Axe Legal, I felt reassured. Stefan explained the director penalty notice in simple terms and outlined the steps to overturn it. Thanks to their diligent work and strategic approach, the director penalty notice was successfully overturned. I cannot thank Axe Legal enough for their support and highly recommend their services to anyone facing similar challenges.

When I received a director penalty notice for unpaid PAYG and GST, I had no idea what to do. Boris immediately explained the difference between lockdown and non-lockdown notices, outlined my options and dealt with the ATO on my behalf. Within two weeks, the matter was resolved without personal liability. I can’t thank Axe Legal enough for acting so quickly.

The ATO issued me a lockdown DPN after my former business fell behind on superannuation. Stefan reviewed the company’s reporting history and negotiated a payment arrangement that avoided bankruptcy. His calm and professional approach turned an extremely stressful situation into a manageable outcome.

After suffering a serious illness, I was issued a DPN for company debts that accrued while I was hospitalised. Boris helped me prepare medical evidence and a defence showing I couldn’t participate in management at the time. The ATO accepted the explanation and withdrew enforcement action.

I reached out to Axe Legal when my company’s tax debts spiralled during the pandemic. Stefan reviewed the ATO’s position, raised errors in the assessment and negotiated a structured repayment plan that kept me out of personal insolvency. He was responsive and genuinely cared which made all the difference.

Before I even received a DPN, my accountant recommended contacting Axe Legal. Boris reviewed my company’s compliance, identified missed lodgements that could trigger personal liability and had everything rectified in time. Thanks to his proactive advice, I avoided a DPN altogether. I’m incredibly relieved and grateful for his foresight.