Director Penalty Notices, explained

A Director Penalty Notice (DPN) is a notice from the Australian Taxation Office issued under Division 269 of Schedule 1 to the Taxation Administration Act 1953. It converts certain unpaid company tax liabilities — most commonly unpaid PAYG withholding, unpaid GST, and unpaid Super Guarantee Charge — into a parallel personal liability owed by the directors.

The ATO issues DPNs to the director's residential address as recorded on the ASIC register. Keeping that address current is critical — a DPN sent to an out-of-date address is still validly served and the 21-day clock still runs.

There are two types of DPN: non-lockdown and lockdown. The difference depends on whether the company lodged its BAS, IAS, or Super Guarantee Charge statements within three months of their due date.

A non-lockdown DPN is issued when those returns were lodged on time. It gives directors 21 days from the date of postage to take one of four actions: (1) pay the debt in full; (2) appoint an administrator under Part 5.3A of the Corporations Act; (3) appoint a Small Business Restructuring Practitioner under Part 5.3B if the company is eligible; or (4) appoint a liquidator. Choosing one of options 2 to 4 within 21 days remits the personal penalty for the unpaid amount.

A lockdown DPN is issued when the returns were not lodged within three months of their due date. The personal liability is already locked. Appointing an administrator, restructuring practitioner, or liquidator does not remit the penalty. The only paths to extinguishing the debt are payment or a personal insolvency procedure under the Bankruptcy Act.

The 21 days run from the date the ATO posted the notice. They do not run from the day you opened it. There is no general discretion in the ATO or the courts to extend the period.

On day 22 of a non-lockdown DPN that has not been actioned, the personal penalty crystallises and the ATO can commence recovery — including garnishee notices to your employer or bank, statutory demands against a company you control, and bankruptcy proceedings against you personally.

All directors at the time the liability arose are jointly and severally liable. The ATO can pursue any one director for the full amount and leave it to that director to seek contribution from co-directors. Resignation does not retroactively remove liability — and section 269-15 of Schedule 1 to the Taxation Administration Act 1953 keeps a director liable for liabilities that existed on the day they were appointed if they do not act within 30 days of appointment to ensure compliance.

First, identify the type. Use a free conversation with the Small Business Debt Helpline (1800 413 828) or the DPN decision tool on this site.

Second, get all outstanding BAS, IAS, and SGC statements lodged immediately. Lodgement does not require payment. Lodging now does not retroactively reclassify an existing DPN but does preserve options for any future amounts.

Third, decide between the four options for non-lockdown DPNs, or focus on the personal debt position for lockdown DPNs. This decision matters and the 21 days run regardless.

The ATO issued 84,529 DPNs to individual directors in FY24-25, covering $5.5 billion in liabilities — a 136% increase on the prior year. The Tax Ombudsman announced a 2026 review of the program in response to the volume. If you have received a DPN, you are part of a population of nearly 85,000 Australians who received one in the prior year alone. Calling the Small Business Debt Helpline is not unusual.