DIRECTOR PENALTY NOTICE

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.

How can we help?

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.

01

Get in touch.

Call us on (02) 8287 3118  or email us at [email protected]. We’re here to help and our first consultation is free of charge.

02

Tell us your side of the story.  

We listen to understand your unique circumstances so we can determine how you can avoid or manage the director penalty.

03

Let us respond to the DPN.

We have advised countless clients in respect to DPNs and helped them avoid or manage the director penalty.

Common Questions

Company directors will receive a non-lockdown DPN where:

  • they have lodged the business activity statements, income activity statements or superannuation guarantee statements of the company; and
  • PAYG withholding, SGC debts and GST amounts remain unpaid.

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:

  • commence proceedings against the director personally to recover the director penalty;
  • use the judgment to issue a bankruptcy notice and subsequently make the director bankrupt; or
  • garnishee funds from the director’s personal bank account or from their wages.

As a director, you will not be liable for a director penalty if:

  • you did not take part (and it would have been unreasonable to expect you to take part) in the management of the company during the relevant period because of illness or other acceptable reason;
  • you took all reasonable steps, unless there were no reasonable steps you could have taken, to ensure that the company paid the amount outstanding, an administrator was appointed to the company or you began winding up the company;
  • in the case of an unpaid SGC liability – the company treated the Superannuation Guarantee (Administration) Act 1992 (Cth) as applying in a way that could be reasonably argued, was in accordance with the law, and took reasonable care in applying that Act.

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:

  • were due before the date of your resignation;
  • fell due after your resignation where the first withholding event in the reporting period occurred before your resignation (for PAYG and GST) or the charge became payable before your resignation (for SGC).

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.

Get in touch