In short
The short answer
- A DPN makes a company director personally liable for certain unpaid company tax debts, such as PAYG withholding, GST and superannuation guarantee charge.
- A non-lockdown DPN gives the director 21 days from the date the notice is posted to act. A lockdown DPN cannot be cancelled.
- Australian Financial Advisory assesses your position, sets out the options in writing, and introduces the right licensed specialist: a registered tax agent for ATO matters, or a restructuring or insolvency practitioner for a formal process.
What is a DPN
What is a Director Penalty Notice?
A Director Penalty Notice is a formal notice issued by the Australian Taxation Office that makes a company director personally liable for certain unpaid company tax debts. Unlike other company debts, a DPN removes the protection of the company structure for those amounts. The ATO can then pursue the director personally.
Once a non-lockdown DPN is issued, the director has 21 days to act. After that window closes, the personal liability is locked in, regardless of what happens to the company.
DPN triggers
What debts can trigger a Director Penalty Notice?
PAYG withholding
Tax withheld from employee wages that was not remitted to the ATO. Directors can be personally liable regardless of whether they were aware the amounts were not being paid.
GST
Unpaid GST obligations are captured under the DPN regime. GST collected from customers but not remitted to the ATO can become a personal liability for directors.
Superannuation guarantee charge
Unpaid superannuation guarantee amounts owed to employees can also give rise to director liability.
Income tax
Outstanding company income tax obligations can give rise to director liability in certain circumstances.
DPN types
The two types of Director Penalty Notice
Non-lockdown DPN
Issued when the company has lodged its BAS and superannuation statements on time but has not paid the debt. Directors have 21 days from the date the notice is posted, not the date it is received, to take action.
Within those 21 days the director can avoid personal liability by:
- Paying the debt in full
- Placing the company into voluntary administration
- Appointing a small business restructuring practitioner
- Commencing liquidation
If no action is taken within 21 days the penalty locks down and the personal liability becomes permanent.
Lockdown DPN
Issued when the company has not lodged its returns within the required timeframes. A lockdown DPN cannot be cancelled.
Once issued, the liability is dealt with by:
- Paying the debt in full
- Placing the company into voluntary administration
- Appointing a small business restructuring practitioner
Liquidation does not remove personal liability for a lockdown DPN.
Critical timing
The 21-day window
The 21-day period for a non-lockdown DPN begins from the date the ATO posts the notice, not the date you receive it. By the time you open the letter, some of those days may already have passed.
Do not assume a notice will resolve itself. Talk to a professional as soon as it arrives. The options available can narrow quickly.
Reducing the risk
How directors can reduce Director Penalty Notice risk
Lodge on time, every time
Even if the company cannot pay, lodging BAS, IAS and superannuation statements on time keeps a non-lockdown DPN from becoming a lockdown DPN.
Engage the ATO early
If the company is struggling with cash flow, approaching the ATO early about a payment arrangement, through a registered tax agent where needed, is better than waiting for a notice.
Keep your ASIC address current
DPNs are sent to the address registered with ASIC. An outdated address is not a defence for missing the 21-day deadline.
Monitor the company's compliance
As a director you are responsible for knowing whether the company is meeting its tax obligations.
Seek advice early
The earlier you talk to a pre-insolvency adviser, the more options may still be available.
How we help
How Australian Financial Advisory helps directors facing a DPN
We work with directors across Gold Coast, Brisbane, Sydney and Australia-wide who have received a Director Penalty Notice or are worried one may arrive. We review your financial position, assess your ATO obligations, and provide a written report with recommended action steps.
We then connect you with the right licensed specialist in our network: a registered tax agent to deal with the ATO, a small business restructuring practitioner, or an insolvency practitioner. We work for you, the director. Any next step is your decision.
Our role
What Australian Financial Advisory can and cannot do
We can
- Assess your financial position and your ATO exposure early.
- Explain what a DPN means and set out the options in writing.
- Introduce a registered tax agent, a restructuring practitioner or an insolvency practitioner from our network.
- Communicate with commercial creditors under a signed authority.
We do not
- Negotiate directly with the ATO on your behalf. That is tax agent work, which we refer to a registered tax agent.
- Act as the restructuring practitioner, administrator or liquidator.
- Give legal advice or promise a particular outcome. Outcomes vary case by case.
Common questions
Director Penalty Notice questions
Can I resign as director to avoid a DPN?
No. Resigning as a director does not discharge liability for non-compliance that occurred during your tenure as director.
Does a payment plan remove a DPN?
A payment plan alone does not remove personal liability under a DPN. For a non-lockdown DPN, the debt must be paid in full or the company must enter administration, restructuring, or liquidation within the 21-day window.
What happens if I do nothing?
If no action is taken on a non-lockdown DPN within 21 days, the personal liability becomes permanent. The ATO can then pursue personal assets. A DPN does not expire.
Can Australian Financial Advisory negotiate with the ATO for me?
We're not a registered tax agent, so we don't provide tax agent services like direct ATO negotiation ourselves. Where that's relevant, we can point you toward appropriately licensed help.
How much does it cost to get advice?
The initial consultation is free. We work on fixed fees agreed upfront, so you know the cost before anything starts.
The information on this page is general in nature and does not constitute legal, financial, taxation, or insolvency advice. Australian Financial Advisory Pty Ltd provides assessment and advisory services only. All specialist services are referred to appropriately licensed partners. You should seek independent professional advice before acting on any information on this page.
Content last updated: 2 October 2026.
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