Director Penalty Notices, explained
A Director Penalty Notice is the mechanism the ATO uses to convert a company tax debt into a personal liability for directors. Whether you can still avoid that personal liability depends mostly on whether the underlying returns were lodged on time.
What is a Director Penalty Notice?
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 Keeping that address current is critical — a DPN sent to an out-of-date address is still validly served and the 21-day clock still runs.
Non-lockdown vs lockdown — the most important distinction
There are two types of DPN: non-lockdown and lockdown. The difference depends on whether the company reported PAYG withholding and GST within three months of the due date — and, for super on wages paid up to 30 June 2026, whether the super guarantee charge was reported by its due date, because that super has no three-month window. For paydays from 1 July 2026, the penalty locks for any super guarantee charge not covered by a voluntary disclosure statement lodged within 60 days of payday and before the ATO assesses the company. An earlier ATO assessment brings that date forward.
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 covers amounts reported late: PAYG withholding or GST reported more than three months after the due date (or never), or super guarantee charge not reported in time (by its due date for wages paid up to 30 June 2026; by a voluntary disclosure statement within 60 days of payday, before any ATO assessment, for later paydays). Appointing an administrator, restructuring practitioner, or liquidator does not remit the penalty. The ATO says the only way to remit it is to pay the company's debt in full. You won't have to pay it if the ATO accepts a defence, for example that illness or another acceptable reason meant you couldn't take part in running the company the whole time. Whether bankruptcy would release it is a question for a registered trustee or the Small Business Debt Helpline.
The 21-day clock
The 21 days run from the date the ATO posted the notice. They do not run from the day you opened it. Don't assume you can get more time.
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, and bankruptcy proceedings against you personally.
Multiple directors
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.
How to act if you receive one
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 lodged immediately, and pay what you can of any missed super to the funds. 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.
Numbers from FY24-25
In 2024–25 the ATO issued more than 84,000 DPNs to directors of about 64,000 companies, a 136% increase on the year before (Tax Ombudsman). The Tax Ombudsman is reviewing how the ATO uses them and expects to report by April 2027. If you have received a DPN, you are far from alone. Calling the Small Business Debt Helpline is not unusual.
Key facts
- 21 days from posting
- The clock runs from the date the ATO posted the notice to your ASIC-registered residential address — not the date you opened it.
- Two types
- Non-lockdown DPNs give four options; lockdown DPNs lock personal liability because PAYG withholding or GST was reported more than three months late, or older super guarantee charge wasn't reported by its due date.
- Joint and several
- All directors at the time the liability arose are personally liable for the full amount.
- FY24-25 volume
- More than 84,000 DPNs to directors of about 64,000 companies in 2024–25, up 136% (Tax Ombudsman).
Frequently asked questions
Sources
- ATO — Director penalty regime
- Taxation Administration Act 1953 — Schedule 1, Division 269
- ATO Annual Report 2024-25
- Tax Ombudsman — Review of the ATO's administration of Director Penalty Notices
We do not refer to commercial debt-relief operators.
Every service we point you to is free or low-cost, government-funded or not-for-profit, and independent of creditors. If a paid operator is offering to negotiate your ATO debt or run a Part IX agreement for a fee, talk to the Small Business Debt Helpline first — 1800 413 828, free.
This can get clearer from here.
TEKVA provides information, not financial counselling or legal advice. Checked October 2026.