What is a Director Penalty Notice (DPN)?

A DPN is a Notice that the ATO can send a director. A DPN can make that director personally liable for three types of tax debts of a company:

1. Pay As You Go (PAYG)
2. Superannuation Guarantee Charge (SGC) liabilities
3. Goods and Services Tax (GST)

The issuance of a DPN can place significant financial responsibility on directors, compelling them to address their company’s tax obligations or face personal liability. There are two types of notices:

1. Lockdown DPN: If a company fails to pay taxes and also fails to lodge the required documents for PAYG, BAS, GST or SGC, a lockdown DPN may be issued. This makes the director immediately liable for the tax debt with no relief available except for paying the debt in full.
2. Non-lockdown DPN: Alternatively, if the company has lodged the required documents but has not made payments, a non-lockdown DPN may be issued. Directors have 21 days to pay the debt, appoint a Voluntary Administrator, appoint a Small Business Restructuring Practitioner (SBRP) or appoint a Liquidator.

Steps to Take if You Receive a DPN

Call us directly. You will speak directly with a Director of our firm, with more than 30-years experience.

We can explain all issues about DPNs and personal liability.

We can explain the options.

The response to the DPN will be influenced by the current circumstances of the company. We will cover that with you.

Consequences

Failure to comply with a DPN can have severe consequences, including personal liability for the company’s tax debts. Directors are responsible for ensuring their company’s tax and super obligations are reported and paid on time.

If the company has an overdue debt with the ATO and doesn’t pay the amount owing or contact the ATO to make alternative arrangements, the ATO may issue a DPN. DPNs are issued to current directors and anyone who was a director at the time the company failed to pay. If the ATO issues a DPN, immediate action is essential. Ignoring a DPN or failing to take appropriate steps within the specified timeframe can lead to significant financial and legal repercussions.

DPNs can have significant impacts on small business owners. From 1 July 2023 to 29 February 2024, ATO has issued 13,454 DPNs. These statistics reflect an already increased number of DPNs being issued post-Covid.

Reach out

At Levi Consulting, we understand the challenges businesses face when dealing with ATO enforcement actions like DPNs. For tailored advice on navigating DPNs, consult an experienced insolvency professional. David Levi is a Registered Liquidator and can act as an Administrator, Liquidator or SBRP. Reach out via DM or call him on 0418 602 466 for a confidential discussion on any issues whether you are a director, accountant or lawyer.