Director Penalty Notice (DPN): What to Do in the Next 21 Days
Received a director penalty notice from the tax office? You may be personally liable for your company’s unpaid PAYG withholding, GST or super – and the clock is already ticking. UV TAX helps directors understand their options fast and act before the deadline.
✔ Registered tax agent✔ Fast response✔ Confidential
⏰ Don’t wait. You have 21 days from the date the DPN was posted (or left at your ASIC-registered address) – not from when you opened it. After 21 days, the tax office can start recovering the money from you personally. Call 0466 268 405 today.
What is a director penalty notice?
Company directors are responsible for making sure their company reports and pays certain tax and super debts on time. If it doesn’t, the tax office can make directors personally liable through “director penalties”. Before it can recover them, it must send you a director penalty notice (DPN).
A DPN can cover the company’s unpaid:
- PAYG withholding – tax withheld from employees’ wages
- GST – including luxury car tax and wine equalisation tax
- Super guarantee charge (SGC) – unpaid employee super
Standard DPN vs lockdown DPN
Standard (non-lockdown) DPN
The amounts were reported on time – PAYG withholding and GST within 3 months of the due date, or SGC by the SGC due date. Within 21 days, the penalty can be remitted if the company pays in full, appoints an administrator, appoints a small business restructuring (SBR) practitioner, or begins to be wound up.
Lockdown DPN
The amounts were reported late or never reported (including where the tax office has made an estimate). The penalty can only be remitted by paying the company debt in full. Administration, SBR or liquidation will not remove a lockdown penalty.
The lesson: lodge your BAS, IAS and super reports on time – even if you can’t pay. Reporting on time keeps more options open if a DPN is ever issued.
Your options within 21 days
1. Pay in full
Paying the company’s debt in full remits the penalty – for both standard and lockdown DPNs.
2. Payment plan
You can engage with the tax office and negotiate a payment plan for the company debt.
3. Restructure or administration
For standard DPNs only: appoint an administrator or an SBR practitioner.
4. Wind up
For standard DPNs only: begin winding up the company.
Options 3 and 4 involve insolvency processes and must be carried out by a registered insolvency practitioner. We can work with an insolvency practitioner and your lawyer.
Key facts every director should know
- Parallel liability: your penalty mirrors the company’s debt. Payments by the company or any director reduce everyone’s liability.
- Every director can get a DPN for the same full amount.
- Resigning doesn’t help: you can remain liable for amounts that were due, or relate to periods, while you were a director – even after the company is deregistered.
- New directors: you can become liable for debts that existed before you joined unless, within 30 days of appointment, the company pays, appoints an administrator or SBR practitioner, or is wound up.
- Estimates count: if the company didn’t lodge, the tax office can estimate the debt – and estimates are treated as never reported (lockdown).
- Keep your ASIC address up to date – DPNs are sent there.
Defences to a DPN
You may not be liable if, for the whole relevant period:
- Because of illness or another good reason, you didn’t take part (and it would have been unreasonable to expect you to take part) in managing the company
- You took all reasonable steps to ensure the company paid, appointed an administrator or SBR practitioner, or began winding up
- For GST or SGC only: the company took a reasonably arguable position and reasonable care in applying the law
Relying on fellow directors or advisers is not a defence. Defences must be made in writing, and timing affects your review rights – act quickly.
What happens if you do nothing?
- Your personal tax refunds and credits can be used to pay the penalty
- Garnishee notices can be issued to your bank or employer
- Legal action can be taken against you personally
- In serious cases, the tax office may also use other firmer actions, such as a departure prohibition order
How UV TAX helps directors
- Urgent review of your DPN – what it covers and whether it is lockdown or standard
- Bring the company’s BAS, IAS and super reporting up to date
- Negotiate with the tax office as your registered tax agent
- Work out a realistic payment plan
- Coordinate with a registered insolvency practitioner or lawyer where needed
- Set up systems so it doesn’t happen again – including Payday Super and STP
⚠️ Important – general information only. This page is a simple overview of the director penalty regime as at November 2026 and is not legal, tax or insolvency advice. Whether a DPN can be remitted, and what is best for you, depends on your circumstances and strict time limits. UV TAX is a registered tax agent – we are not lawyers or registered insolvency practitioners. Administration, small business restructuring and liquidation must be carried out by a registered insolvency practitioner, and you should also obtain legal advice. Outcomes are decided by the tax office or the courts, and UV TAX cannot guarantee any result.
Got a DPN? Talk to us today
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0466 268 405Frequently asked questions
What is a director penalty notice (DPN)?
A DPN is a notice from the tax office telling a company director they are personally liable for the company’s unpaid PAYG withholding, GST or super guarantee charge. The tax office must issue a DPN before it can recover these director penalties from you.
How long do I have after receiving a DPN?
21 days. The 21 days starts on the day the DPN is posted or left at your address registered with ASIC – not the day you open it.
What is a lockdown DPN?
A lockdown DPN covers amounts that were not reported on time – PAYG withholding or GST not reported within 3 months of the due date, or SGC not reported by its due date. A lockdown penalty can only be remitted by paying the company debt in full.
Can I get rid of a DPN by appointing an administrator or liquidator?
For non-lockdown amounts, appointing an administrator, a small business restructuring practitioner or starting to wind up the company within 21 days can remit the penalty. For lockdown amounts it does not.
Can I avoid a DPN by resigning as a director?
No. You can remain liable for amounts that were due, or that relate to periods, while you were a director – even after you resign or the company is deregistered.
Does a payment plan stop a DPN?
The tax office says you can engage with them and negotiate a payment plan for the company debt within the 21 days. A payment plan is not the same as remitting the penalty, so get advice on your position.
Are new directors liable?
A new director can become liable for unpaid amounts due before their appointment unless, within 30 days of appointment, the company pays the debt, appoints an administrator or SBR practitioner, or is wound up.
Is there a defence to a DPN?
Defences exist – for example, illness preventing you from taking part in management, or taking all reasonable steps to ensure one of the required actions happened. Relying on others is not a defence.
Related
General information current as at November 2026.