Nothing ruins a Tuesday quite like an envelope from the ATO with "Director Penalty Notice" printed on the front.
A DPN is one of the more serious letters a company director can receive, and also one of the most misunderstood. The good news, if there is any: you almost always have options. The bad news: the clock on those options starts the moment the notice is issued, not the moment you get around to opening it.
What A DPN Actually Is
A Director Penalty Notice makes a company director personally liable for certain unpaid company tax debts: typically unpaid PAYG withholding, GST, or superannuation guarantee charge. It exists so directors can't simply let a company rack up these specific debts and walk away from them.
Lockdown vs Non-Lockdown DPNs
This distinction matters more than almost anything else in the notice:
- Non-lockdown DPN: issued when lodgements were made on time (even if unpaid). You get 21 days from the date of the notice to act, with several options still available.
- Lockdown DPN: issued when the underlying lodgements are more than three months overdue. In this case, paying the debt in full is generally the only way to remove personal liability: there's no 21-day menu of alternatives.
The 21-Day Clock
For a non-lockdown DPN, the 21 days start from the date on the notice, not the date you happened to open the envelope. Every day that passes without action is a day closer to those options disappearing.
Your Options Within The Window
- Pay the debt in full. The most direct way to remove personal liability.
- Appoint an administrator to the company.
- Appoint a small business restructuring practitioner, where the company is eligible.
- Place the company into liquidation.
Each of these has very different consequences for the business and for you personally: this is exactly the kind of decision that benefits from an urgent, clear-headed conversation rather than a rushed one.
What Happens If You Miss The Deadline
Once the 21 days lapse without action, the personal liability generally locks in, and the options above are no longer available to remove it. This is the single most important reason to act immediately, not "this week."
How Mr Figures Helps
Our professionals in the Tax Solutions service assess your notice straight away, confirm exactly which options are still open, and coordinate with insolvency practitioners from our professional network where needed, while dealing directly with the ATO on your behalf. If the business itself needs a broader plan beyond the notice, our guide on signs your business needs restructuring is worth reading too.
Just Received A DPN?
Time matters here: tell us what's going on and we'll help you move fast, with no judgement.
Let's Discuss Your SituationDirector Penalty Notices: Common Questions
A non-lockdown DPN is issued when lodgements were made on time even though the debt wasn't paid, giving you 21 days to pay, appoint an administrator, or appoint a restructuring practitioner. A lockdown DPN applies once lodgements are over three months overdue, leaving paying in full as the only way to remove personal liability.
No. Ignoring a DPN doesn't remove personal liability, it locks it in regardless of what happens to the company afterward, and the ATO can still pursue you personally after it's wound up. Appointing a liquidator or administrator is a valid option, but it still needs to happen inside the 21 days.
Not automatically. A DPN makes you personally liable for specific unpaid company tax debts such as PAYG withholding, GST, or super guarantee charge, and the ATO can pursue it like any personal tax debt: payment plan, garnishee action, or legal proceedings. It's a debt to be managed, not an automatic bankruptcy.
Yes, and speed matters here. We assess the notice to confirm which type of DPN it is and how many days are genuinely left, then map out which options suit your situation. Where an option requires a registered insolvency practitioner, we coordinate directly with the right one for your circumstances while dealing with the ATO on your behalf.
This article is general information only and doesn't take into account your personal circumstances. It isn't a substitute for advice tailored to your situation. If you've received a DPN, book a consultation as soon as possible so we can review your specific notice and timeline with you.