Director Penalty Notices: 21 days to act, or you are personally liable

21 days to act: what Australian directors need to know about DPNs

What is a Director Penalty Notice?

A Director Penalty Notice (DPN) is a letter from the Australian Tax Office that can hold company directors personally liable for unpaid company tax debts, including PAYG, GST and superannuation.

There are two types of DPN you need to know.

1. The Standard DPN

This gives directors 21 days from the date of the notice to take action, by paying the debt, appointing a liquidator, or putting the company into voluntary administration. If you act within this window, you can often avoid personal liability.

2. The Lockdown DPN

This applies when a business has failed to lodge its BAS or PAYG within 90 days of the due date. At this stage the debt has already been transferred to you personally. It is recorded on your personal tax portal, and it is too late to reverse.

Why timing matters

The difference between a 21-day DPN and a lockdown DPN is timing. If you have missed your lodgement deadlines, even by a few months, the ATO can bypass your company entirely and pursue you directly.

How to protect yourself

• Always lodge your BAS and PAYG on time, even if you cannot pay immediately.
• If you have received a DPN letter, seek professional advice right away.
• Avoid ignoring ATO correspondence. 21 days goes fast.

At BDK Risk Management we help business owners respond to DPNs quickly and strategically, before they become personal tax debts.