The ATO issued more than 84,000 director penalty notices in the 2024-25 financial year, an increase of around 136 per cent on the year before. The Tax Ombudsman has the regime under review. Whatever you think about that, the practical position for directors is that this is now a common event rather than a rare one.
What a DPN does
A director penalty notice makes you personally liable for certain company tax debts. It covers PAYG withholding, GST, and the superannuation guarantee charge.
Superannuation guarantee charge is the one that hurts most, because it is calculated on all wages rather than ordinary time earnings, it includes interest and an administrative component, and it is not deductible. A company that has been quietly late on super has an exposure considerably larger than the contributions it failed to pay.
The two types, and why the difference is everything
A non-lockdown DPN is issued where the company lodged its business activity statements and superannuation guarantee statements on time, or lodged them late but before the debt became more than three months overdue. You have 21 days from the date of issue to do one of four things: pay the debt, appoint a small business restructuring practitioner, appoint an administrator, or begin winding up the company. Any of those remits the penalty.
A lockdown DPN is issued where the lodgements were not made in time. There is no escape route. Placing the company into administration does not remit the penalty. You are personally liable, full stop, and the only remaining question is how you pay.
The entire difference between those two outcomes is whether the company lodged on time.
The 21 days
The clock runs from the date the notice is issued, not the date you receive it. The ATO sends it to the address on the ASIC register.
Which means that if your ASIC registered address is an old accountant's office, or a house you moved out of in 2021, or a PO box nobody checks, you can lose most of your 21 days before you know the notice exists. This happens regularly and it is entirely preventable.
Check your ASIC registered address today. It takes five minutes and it is the cheapest insurance available.
What actually protects you
Lodge on time, always, even when you cannot pay. This is the whole game. Lodging on time keeps you in non-lockdown territory, which preserves every option. Not lodging, because you cannot pay and do not want to draw attention, converts a difficult situation into a personal liability. It is the single most costly instinct in small business.
Engage early. The ATO's stated approach distinguishes between businesses that engage and businesses that do not, and the difference shows up in how quickly enforcement escalates.
Do due diligence before accepting a directorship. Director penalties can attach to liabilities that arose before you were appointed, in defined circumstances. Check the lodgement history before you sign anything.
Resigning does not clear what accrued while you were there. A common misconception, and an expensive one.
If a notice has arrived
Get advice the same day. The 21 days is a statutory period and it does not extend because you were busy or away. Which of the four options is right depends on the company's position, and some of them foreclose others.
This is one of the few areas where a day genuinely matters.