Director penalty notices

Received an ATO director penalty notice (DPN)?

Get outcome-focused guidance from former ATO lawyers to achieve the best possible outcome.

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Why have I received a director penalty notice?

DPNs are used to recover tax debts from company directors including:

Pay As You Go (PAYG) withholding
Goods and Services Tax (GST)
Superannuation Guarantee Charge (SGC)

Traditionally, the ATO has issued DPNs after repeated attempts to contact the company for payment. However, during COVID-19, many companies accumulated debt without immediate consequences, leading to situations where the money was no longer available when the ATO sought to collect.

This is prompting the ATO to now issue DPNs earlier, while companies still have the funds to meet their obligations. In some situations, this enables directors to make timely decisions about whether to continue trading or consider insolvency processes.

Therefore, it is important to act quickly to maximise your options for dealing with your DPN, or to consider whether a defence applies.

What can directors do once they receive a DPN?

During 21-day notice period

Once you receive a DPN, you have 21 days to take action to avoid the ATO taking action against you personally.

In some cases, this can involve taking steps to place the company into administration or liquidation, or appointing a small business restructuring practitioner.

It is important to note that these 21 days start from when the ATO posts the DPN, not the day you receive it.

You can also enter a payment plan for the director penalty debt. However, if you later default on that plan, you do not get a further 21 days to avoid recovery action.

After the 21-day notice period

If the 21-day period of the DPN has expired, we can consider whether the underlying liability is correct, whether there is any invalidity in the ATO raising the liability or in issuing the DPN, or whether any statutory defences apply.

To discuss the options available to you, contact Aptum for advice.

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"The whole team from Aptum have all been very professional and always gone above and beyond for me and my family. I will highly recommend them to people in my network needing legal professionals."

– Stephen Ryan (Company Director)

How we will work together

There are a range of actions that can be taken to either prevent personal liability or lessen the effects of a DPN, and it is crucial to properly understand those options before acting.

We apply a consistent process to ensure you are on the best pathway to achieving your objectives in dealing with ATO.

DPN DIAGNOSTIC - 15MIN CALL TO ASSESS OPTIONS

DPN PATHWAYS ASSESSMENT - 1HR CONSULTATION TO PLAN YOUR APPROACH TO DEALING WITH THE ATO

EXECUTION OF CHOSEN PATHWAY - FIXED PRICE OPTIONS TO ACHIEVE YOUR DPN SOLUTION

What are the director penalty notice defences?

You were not involved in managing the company due to illness or other good reasons

The first statutory defence can apply in circumstances where for illness or for some other good reason, you were actually not involved in managing the company at the relevant times.

Importantly, it needs to be unreasonable to expect you to have managed the company.
All reasonable steps were taken to ensure the company complied with its obligations

The second statutory defence can apply where you took all reasonable steps to ensure the company met its obligations. Alternatively, that there were no reasonable steps you could have taken.

Importantly, this needs to be shown from the period the liability first arose, not simply when you received the DPN.

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