What to do if you receive a director penalty notice

If you receive a director penalty notice (DPN), start by finding the date the ATO posted it. The ATO generally can't start court proceedings against you until 21 days after that date, and what you and the company do in those days decides which options stay open.

A DPN tells a company director that they are personally liable for a penalty equal to the company's unpaid PAYG withholding, GST or superannuation guarantee charge. For how the DPN regime works, see director penalty notice lawyers.

What does a director penalty notice look like?

A DPN is a letter from the ATO addressed to you personally as a director, not to the company. The ATO can give it by leaving it at, or posting it to, an address that ASIC's records show as your home or business address, or showed in the last 7 days (Taxation Administration Act 1953, Sch 1 s 269-50). If your registered tax agent's address is your address for service, the ATO may also send a copy there, but your 21 days still run from the actual notice (TAA Sch 1 s 269-52).

The notice must (TAA Sch 1 s 269-25(2)):

• set out what the ATO thinks is the company's unpaid amount,
• state that you are liable to a penalty equal to that amount because of your obligations as a director, and
• explain the main circumstances in which the penalty will be remitted.

One notice can cover several penalties, such as different tax types or periods, but must deal with each (s 269-25(3)). Read every page, because amounts on one notice can be treated very differently.

Your 21 days at a glance

When	What to do
Today	Find the posting date and your last day. Don't resign, sign anything or make large payments before getting advice.
First week	Get the company's ATO account and lodgement history and identify any lockdown amounts. If administration, restructuring or liquidation is possible, speak to an insolvency practitioner.
Second week	Arrange payment, or hold the board meeting and make the appointment. Collect defence evidence.
Well before the last day	Confirm the step has legally taken effect, not just been agreed.

Step 1: work out when your 21 days end

The 21 days run from when the ATO posts the notice or leaves it at your address, not from when you receive or open it (TAA Sch 1 s 269-25(4)). That overrides the general rule that a posted document is taken, unless the contrary is proved, to be served when it would be delivered in the ordinary course of post (Acts Interpretation Act 1901, s 29). A notice posted to an old address still on ASIC's records is generally validly given.

• Don't assume the date on the notice is the posting date. If timing is tight, ask the ATO when it was posted and work from the earlier date.
• The posting day itself isn't counted, so day 21 falls on the same weekday three weeks later. For example, for a notice posted on Monday 2 November 2026, day 21 is Monday 23 November 2026 (Acts Interpretation Act 1901, s 36(1), item 6).
• Treat day 21 as a hard deadline and aim to have any company step in place several days earlier. If day 21 is a public holiday, don't assume you get until the next business day: it is unclear whether the general rule extending deadlines that fall on holidays applies to these 21 days.

Step 2: check what the notice covers

Compare each amount on the notice with the company's ATO records:

1. The tax type. DPNs can cover PAYG withholding, GST and super guarantee charge (TAA Sch 1 s 269-10). GST is covered for tax periods starting on or after 1 April 2020 (ATO practice statement PS LA 2011/18, para 47).
2. The figures. Raise uncredited payments or wrong figures with the ATO in writing.
3. ATO estimates. Until an estimate is reduced or revoked, your obligation attaches to it even if it exceeds the real debt (s 269-15(2A)). The company generally has 7 days after the estimate notice is given, or longer if the ATO allows, to have it reduced or revoked by a statutory declaration from a director, the company secretary or the public officer (Sch 1 ss 268-40 and 268-90). The ATO can also reduce or revoke an estimate at any time, but doesn't have to consider doing so (s 268-35).
4. Lockdown. Usually the most important check.

Is it a lockdown DPN?

A penalty is "locked down" when the company didn't report the debt on time (TAA Sch 1 s 269-30(2)):

• PAYG withholding and GST: not reported to the ATO within three months after the due date.
• Super guarantee charge: not disclosed to the ATO by the due date. For wages paid from 1 July 2026, that means a voluntary disclosure statement for the payday, lodged within 60 days after the payday and before the day the ATO assesses the charge. For quarters ending on or before 30 June 2026, it means the super guarantee statement for the quarter, due on the 28th day of the second month after the quarter ended.

For lockdown amounts, administration, small business restructuring or liquidation won't remit the penalty, so payment or a defence is usually the only way out. If the company reported less than it owed, the unreported difference is generally locked down (s 269-30(2); PS LA 2011/18, Table 1). An estimated PAYG withholding or GST amount is locked down unless the appointment or winding up happens within three months after the original due date, and an estimated super guarantee charge amount unless it happens by the original due date (s 269-30(2), items 2, 4 and 6).

If some PAYG withholding or GST amounts are still inside their three-month window, reporting them now can keep them out of lockdown. A director appointed during or after that window gets three months from appointment instead, but not for super guarantee charge (s 269-30(3)). See DPNs for new and resigned directors and lockdown director penalty notices.

Step 3: decide what the company will do

The penalty is generally remitted if, within the 21 days, the company does one of the first four things below (TAA Sch 1 ss 269-15(2) and 269-30(1)).

Company step within 21 days	Reported amounts	Lockdown amounts
Pays the debt in full	Remitted	Remitted
Appoints a voluntary administrator	Remitted	Not remitted
Appoints a small business restructuring practitioner	Remitted	Not remitted
Begins to be wound up	Remitted	Not remitted
Enters a payment arrangement	Not remitted (court action paused)	Not remitted (court action paused)

Paying in full

A company payment towards the debts covered by the notice reduces your penalty by the same amount, whenever it is made (s 269-40). A payment the ATO applies to other company debts doesn't reduce the penalty, so confirm how it will be applied. If the company is insolvent, a liquidator may later claw back some payments to the ATO, and directors can then have to indemnify the ATO for PAYG withholding amounts and estimates of super guarantee charge (Corporations Act 2001, s 588FGA).

Administration, restructuring or liquidation

Administration and small business restructuring both require a board resolution that, in the directors' opinion, the company is insolvent or likely to become insolvent (Corporations Act ss 436A and 453B), and restructuring has eligibility criteria (s 453C). A practitioner will want to review the company's solvency before accepting the appointment, so start early.

Liquidation remits the penalty only if the company actually begins to be wound up within the 21 days. A voluntary winding up generally begins when the members pass the special resolution (Corporations Act s 513B), and a court winding up when the court makes the order, not when the application is filed (s 513A), so filing on day 20 won't help. See director penalty notices after liquidation.

A payment arrangement

While an arrangement covering the company's debt is in force, the ATO can't start, or take a procedural step in, proceedings to recover the penalty from you (TAA Sch 1 s 269-15(3)). It doesn't remit the penalty or extend the 21 days (s 269-30(1)), it doesn't stop the ATO issuing DPNs (s 269-15(3), note 2), and general interest charge keeps accruing because the arrangement doesn't change the due date (s 255-15(2)). See payment plans for director penalty notices.

Step 4: check whether a defence applies

You are not liable for the penalty if one of these defences applies (TAA Sch 1 s 269-35):

• Illness or other good reason. Because of illness or another good reason, it would have been unreasonable to expect you to take part in managing the company during the relevant period, and you didn't.
• All reasonable steps. You took all reasonable steps to ensure the company paid, appointed an administrator or restructuring practitioner, or began to be wound up, or there were no reasonable steps you could have taken. This depends on when and for how long you were a director and took part in management, and all other relevant circumstances (s 269-35(3)). The ATO asks what a reasonable director in your position knew or ought to have known (PS LA 2011/18, para 65).
• Reasonably arguable position (GST and super guarantee only). The penalty resulted from the company taking a reasonably arguable position on how the law applied, and it took reasonable care (s 269-35(3A)).

Start collecting evidence now: board minutes, emails with your accountant, cash-flow forecasts, bank statements, medical records if relevant, and a timeline of what you knew and did. Documents made at the time carry more weight than later recollection.

If the ATO gives you a copy of a garnishee notice covering the penalty, or tells you in writing it has recovered some of it, you generally have 60 days, starting on the day it does so, to give it the information it needs to accept an illness or reasonable steps defence (s 269-35(4A); PS LA 2011/18, para 71). In court, you must prove either of those two defences (s 269-35(4)). More detail: defences to a director penalty notice.

Step 5: talk to your accountant, the ATO and a lawyer

Ask your accountant for the company's ATO account, lodgement status and cash-flow position; we work alongside accountants, not around them. Confirm the posting date and amounts with the ATO, and get key points in writing. Get legal advice on the company options, any defence and your own exposure before committing, because some choices are hard to undo.

Other directors may have received their own notices. Each director under the same obligation is liable for a penalty equal to the same unpaid amount (s 269-20(5)), a payment by one reduces the others' penalties (s 269-40), and a director who pays generally has rights to recover from the company and the other directors (s 269-45). Directors whose positions differ, for example one who was ill, may need separate advice.

What not to do

• Don't ignore it. After 21 days the ATO can start court proceedings against you personally. It also has other tools, such as garnishee notices and, in some cases, a departure prohibition order stopping you leaving Australia (TAA s 14S).
• Don't move assets. An officer whose conduct results in an insolvent, or soon to be insolvent, company disposing of property for less than its value, in a way that keeps it from creditors, can commit an offence or contravene a civil penalty provision (Corporations Act ss 588FDB and 588GAB). Moving your own assets doesn't reduce your liability.
• Don't resign thinking it ends the problem. Resigning doesn't remove a penalty for amounts that arose while you were a director, even if they fall due after you resign (s 269-20(1) and note; PS LA 2011/18, para 56), and it takes you out of the board decisions that could still have the penalty remitted. If ASIC isn't notified within 28 days, a resignation generally takes effect only when notice is lodged (Corporations Act s 203AA), and one that would leave the company with no director has no effect unless the company is already being wound up (s 203AB).

Next step

Send us the whole notice, the envelope or a note of when and where it arrived, the company's ATO account statement if your accountant has it, and the dates you became (or stopped being) a director. In a first call we'll work out your last day, which amounts are locked down and what the company can still do in the time left.