Being a company director comes with real legal responsibilities — and one of the most important (and often misunderstood) is your personal liability for PAYG withholding, GST and superannuation.
If your company falls behind on these ATO obligations, you might receive Director Penalty Notices (DPNs). These notices are serious, time-sensitive and can make directors personally liable for company tax debts.
Here’s what every director — including newly appointed ones — needs to know.
What is a Director Penalty Notice (DPN)?
A Director Penalty Notice is a formal notice from the ATO that can make a director personally liable for certain unpaid company taxes, including:
- PAYG withholding
- Superannuation Guarantee Charge (SGC)
- GST (added in 2020)
- WET and LCT for some industries
The ATO issues a DPN when they’ve exhausted normal collection options and want to enforce director responsibility.
Two types of DPNs (and why it matters)
There are two kinds of DPNs: Non-Lockdown and Lockdown. The type you receive determines whether the debt can still be avoided.
1. Non-Lockdown DPN (“remittable”)
You receive a Non-Lockdown DPN when your company has:
- Lodged its BAS/IAS/Super statements on time,
- But hasn’t paid the resulting debt.
You can avoid personal liability if, within 21 days of the notice being issued, the company does one of the following:
- Pays the debt in full
- Enters into an ATO payment arrangement
- Appoints a voluntary administrator
- Appoints a liquidator
The key point: you still have options — but only within 21 days.
2. Lockdown DPN (“non-remittable”)
This is the serious one. A Lockdown DPN is issued when the company:
- Hasn’t lodged the BAS/IAS or superannuation statements within the required timeframes, and
- Still owes the debt.
In this case, even if you appoint an administrator, liquidator or enter a payment plan — the director is still personally liable.
You cannot “remit” (remove) the penalty. The only way out is to pay the debt.
This is why lodging on time is critical, even if you can’t pay — it protects directors from personal liability.
The 21-day deadline is strict
The 21 days start from the date the notice is issued, not when you receive it.
The ATO sends DPNs to the director’s address listed with ASIC — so if your details aren’t up to date, you may not even know a notice has been issued until it’s too late.
Once the 21 days have passed, the penalty becomes enforceable, and the ATO can take recovery action against you personally.
New directors: liability can apply to you too
If you become a director of a company that already has unpaid PAYG, GST or SGC, you can become personally liable for those debts:
- Step into a role with unpaid debts?
You have 30 days from appointment to fix the problem (pay, appoint an administrator, or wind up). - After 30 days, you can be issued a DPN just like any other director.
This is why new directors should always request an ATO account status check before accepting the role.
What happens if a director ignores a DPN?
If no action is taken within the 21-day window, the ATO can pursue recovery personally through:
- Garnishee notices
- Bank account freezes
- Wage garnishing
- Personal legal proceedings
- Bankruptcy proceedings (in severe cases)
A DPN should never be ignored — even if the company is already struggling.
Common triggers for DPNs
We see DPNs issued when:
- Cashflow issues cause the company to stop paying PAYG or super
- Directors forget to lodge BAS or super by the deadlines
- The company is trading insolvent
- ATO payment plans are missed or cancelled
How to avoid ever receiving a DPN
You can dramatically lower the risk by:
- Lodging BAS, IAS and super on time, even if the company can’t pay
- Keeping accurate payroll and super records
- Checking your ASIC address is current
- Acting quickly if cashflow tightens
- Ensuring super is paid quarterly — not at year-end
Directors don’t need to fear DPNs — but they do need to understand them.
If you receive a DPN, what should you do?
Don’t panic — but don’t wait.
- Contact your accountant immediately
- Confirm whether it’s a Lockdown or Non-Lockdown DPN
- Review if payment, a payment plan, or an insolvency appointment is the right next step
- Take action before the 21-day window closes
The faster you act, the more options you have.
Need help?
If you receive a DPN — or you suspect one may be coming — get in touch right away. We can:
- Review the company’s ATO position
- Identify whether the notice is remittable
- Work with the ATO on payment arrangements
- Liaise with insolvency specialists if necessary
- Help you get lodgements up to date to protect directors going forward
Early advice makes a huge difference. If you need support, we’re here to help.
