Director Penalty Notice: Next steps

Restructuring Insights

Help! I received a letter from the Australian Taxation Office (ATO) warning of a possible director penalty notice (DPN) for unpaid company debt.

What should I do?Warning of a possible director penalty notice (DPN) for unpaid company debt.

The ATO recently issued over 50,000 warning letters to directors whose companies have existing ATO debt and have not taken the necessary steps to manage this debt.

The ATO has the power through the DPN regime to make company directors personally liable for their company’s debts for unpaid taxes including Goods and Services Taxes (GST), Pay-As-You-Go withholding liabilities (PAYGW), and Superannuation Guarantee Charges (SGC).

If you receive a DPN (usually sent to the directors' personal address) and do not act within the specified timeframes, the ATO may garnish funds from your personal bank account, offset your personal tax refunds, or commence legal recovery proceedings against you, which may ultimately result in personal bankruptcy.

To discuss the options available to you, call us today on 1300 263 816 or email our specialist team at [email protected]


What can I do if I receive a DPN?

For a Non-lockdown DPN:What can I do if I receive a DPN?

You can avoid personal liability by taking one of the following actions within twenty-one (21) days of a DPN being issued:

  1. Paying the amount owing on the DPN; or
  2. Appointing an insolvency practitioner to the company.

For a Lockdown DPN: 

If you have received a ‘Lockdown DPN’, you can only avoid personal liability by paying the amount owing.

The option to appoint an insolvency practitioner will not avoid personal liability for a Lockdown DPN.

However, it may limit your risk of further interest, penalties and other claims that may result if the company continues to trade.


Is my DPN Lockdown or Non-Lockdown?If you have received a ‘Lockdown DPN’, you can only avoid personal liability by paying the amount owing.

For GST and PAYGW debts, a Lockdown DPN may be issued when a BAS is lodged more than three months after the due date.

For SGC debts, a Lockdown DPN may be issued when an SGC Statement is lodged after its’ due date, being one month after the Superannuation Guarantee payment was due.


So, am I personally liable?

Answer the questions below to find out if you could be personally liable for the tax debts of your company, and what you should do next.

 

To discuss the options available to you, call us today on 1300 263 816 or email our specialist team at [email protected]

Authors

Reginald Kuek
Principal - Perth
Jacob Pantlin grey.png

Jacob Pantlin

Assistant Manager, Restructuring & Recovery

Contact Jacob

 

Contact your local insolvency specialist