Definition
A director penalty notice, or DPN, is an ATO letter that shifts responsibility for certain company tax debts, namely withheld wages tax, GST and the super guarantee charge, onto directors personally. Recovery action can start three weeks after the date on the letter. Late or missing lodgements narrow the ways out to paying the full amount.
This regime is a key route by which tax owed by a company ends up on a director’s own balance sheet.
What it covers
The ATO’s director penalty page lists the debts in scope: amounts withheld from pay, net GST and the super guarantee charge.
The timing
Once three weeks have passed since the letter, the ATO may start collecting from the director. Where the company lodged on time, a director can still clear the penalty within that window by having the debt paid, putting the company into administration or small business restructuring, or starting a wind-up. If reported late or not at all, generally only full payment remits it.
Prevention
Lodge on time even when you cannot pay, and set aside PAYG and GST as collected. Our guide to director penalty notices explains more. If you need to explore finance quickly, make one enquiry.
Common questions
What should I do if I receive a DPN?
Note the issue date, work out the 21-day deadline and get professional advice immediately. Options narrow quickly.
Can finance help with a DPN?
Finance used to pay the company's liability in full can remit the penalty, but decisions should be made with professional advice.
Sources and further reading