Director penalty notice: what to do in the next 21 days
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A director penalty notice makes a director personally liable for the company's unpaid PAYG withholding, GST or super guarantee charge. There are 21 days, counted from the day the ATO posted it to the ASIC-registered address, not the day it was opened. What can be done in that time depends on whether it is a lockdown or non-lockdown notice.
Work out the date tonight
The ATO counts from the day it posted the notice or left it at the ASIC-registered address. The date printed on the notice can be different, so work from the earliest date available and ask a professional to confirm it, then add 21 days. If the envelope sat in a PO box for a week, those days are already gone.
Lockdown or non-lockdown
Non-lockdown: the company reported the debt on time, meaning activity statements lodged within three months of the due date and the super guarantee statement lodged by its due date. Within the 21 days, personal liability can be remitted if the debt is paid, or the company appoints a voluntary administrator, a small business restructuring practitioner or a liquidator. Lockdown: the debt was not reported in time, and paying the debt is the only way to remove personal liability; administration or liquidation deals with the company's debt, and the director stays liable. The notice wording usually says which one it is. A payment plan with the ATO does not remit a DPN on its own.
The next 21 days
Keep the notice and the envelope, and write down when it arrived. Ask the accountant whether the BAS and super statements were lodged on time. Talk to a registered liquidator or small business restructuring practitioner this week; a first meeting is often free, and it helps to bring the notice, the last BAS and a list of what the company owes. Decide before day 21: pay, appoint, or get advice on a defence. Doing nothing leaves the ATO free to recover through garnishee notices, offsetting refunds or court action.
What Mike would tell a mate
[PLACEHOLDER: Mike to confirm or edit this paragraph in his own words.] Most directors who call have rung a lender first. Borrowing against the house to pay a DPN can make sense in a narrow set of cases. More often it turns a company debt into a personal one that outlives the business. Get a free opinion from a registered professional before signing anything.
Questions people ask
Does a director penalty notice expire?
No. If nothing is done, the ATO can act on it later.
I resigned as a director. Am I still liable?
Possibly, for debts from while serving as a director. Ask a lawyer about the dates.
Can I just set up a payment plan?
It helps the company, and it does not remit the penalty under the 21-day rules.
Will liquidation fix a lockdown DPN?
It deals with the company. Personal liability stays.
Sources
ATO, Director penalty regime, ATO Practice Statement PS LA 2011/18, ASIC, What to do if your company is insolvent. Checked 21 October 2026.
Formal notice? Call 0489 080 360 and contact your qualified adviser promptly.
Written by Mike Haydon. Reviewed by [PLACEHOLDER: registered liquidator or lawyer, registration number, date].