If your company does not meet its pay as you go withholding, goods and services tax or super guarantee charge obligations, the ATO may issue you with a director penalty notice to recover these amounts from you personally as a director of the company.
Our expert team of tax lawyers can help you determine whether the DPN is a lockdown DPN or non-lockdown DPN and provide you with innovative solutions to get the tax outcome you want.
If you’ve received a director penalty notice (DPN) from the ATO, we can assist by determining whether the DPN is a lockdown DPN or non-lockdown DPN and the defences or solutions available to prevent you from being personally liable for the company’s pay as you go (PAYG) withholding, goods and services tax (GST) or super guarantee charge (SGC) obligations.
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Company directors will receive a non-lockdown DPN where:
Non-lockdown DPN’s will be remitted if the company pays the outstanding tax or goes into voluntary administration or liquidation, within 21 days of the date on which the DPN is issued.
Company directors will receive a lockdown DPN where a company has not lodged its business activity statements, income activity statements or superannuation guarantee statements, by their due date for lodgement.
In this case, company directors become automatically liable for the unpaid PAYG withholding, SGC and GST to the ATO.
After receiving a DPN, a director has 21 days repay the amount set out in the DPN. If the director fails to pay the amount, the ATO is able to:
As a director, you will not be liable for a director penalty if:
It is important to note that as a director, it is not a defence if you relied on others (including fellow directors and professional advisors) to ensure your obligation was met.
Before you become a director
If you become a director and the company has outstanding PAYG, GST or SGC obligations, you will become personally liable for a director penalty equal to these amounts, which is why it is of upmost importance that you check for any unpaid or unreported PAYG, GST or SGC liabilities before you become a director of a company.
As a director
As a director you are responsible for making sure the company meets its PAYG, GST and SGC obligations. If your company fails to meet a PAYG, GST or SGC liability in full by the due date, you will become personally liable for director penalties equal to the unpaid amounts.
In order to avoid director penalties, you will need to take steps to have the company lodge and pay its PAYG, GST and SGC to the ATO by the due date.
No longer a director
If you are no longer a director, you remain liable for director penalties equal to the unpaid PAYG, GST and SGC of the company that:
In order to avoid director penalties, you will need to take steps to have the company lodge and pay PAYG, GST and SGC obligations that are due before the date of your resignation to the ATO before you resign as a director.