Director Penalty Notices
We help directors navigate the complexities of a DPN.
Director Penalty Notices (DPNs), can put both your business and personal assets at serious risk.
With immediate financial implications, you need swift action. TTJ Advisory can help you avoid costly penalties, manage liabilities, and safeguard your financial future.
A Director Penalty Notice (DPN) is a formal notice issued by the ATO to company directors, holding them personally liable for unpaid tax debts— specifically, Pay As You Go (PAYG) withholding and Superannuation Guarantee Charge (SGC).
The DPN regime is designed to ensure directors are diligent in meeting their tax obligations, but in situations of insolvency, these notices can have serious consequences.
There are two types of DPNs:
1. Non-Lockdown DPNs
These provide directors with a 21-day window to act by either paying the outstanding debt, appointing a voluntary administrator, or initiating liquidation. Failure to act within this timeframe results in personal liability.
2. Lockdown DPNs
Issued when tax obligations have been unreported or unpaid for extended periods, these notices render directors personally liable immediately, with no option to avoid liability, even if the company enters liquidation.
At TTJ Advisory, we understand the pressures directors face, particularly when grappling with tax debts and insolvency.
How TTJ helps you navigate the complexities of DPN’s and insolvencies
Immediate Consultation
Timing is crucial with a DPN. We will determine the best course of action within the critical 21-day window, whether it’s negotiating with the ATO, paying the debt, or considering voluntary administration or liquidation.
Insolvency and Restructuring Advice
If your business is on the verge of insolvency, we provide strategic advice on restructuring options. We’ll guide you through voluntary administration or liquidation to minimize personal liability and explore recovery options for your business.
Negotiating with Creditors and the ATO
We can liaise directly with the ATO on your behalf to explore potential payment plans or negotiate leniency where possible. Our goal is to help you manage your tax obligations in a way that protects both your personal and business interests.
Long-Term Solutions
Beyond immediate crisis management, TTJ Advisory will work with you to implement long-term strategies that safeguard your company’s financial health, ensuring future compliance and minimizing risks associated with DPNs.
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Frequently Asked Questions
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What if the company can’t pay debts to creditors?In this case, you may need a Voluntary Administrator (VA) or a Small Business Restructuring (SBR) practitioner. TTJ Advisory can help by: Identifying tax debts tied to director penalties, Negotiating with creditors for debt compromises, Generating working capital through restructuring to address outstanding debts, and Sourcing funding through future profits, personal contributions, or third-party funds. This proactive approach gives you a structured plan to manage debts while preserving the company's ability to operate.
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Is liquidation necessary if i can’t pay the debts?In cases where there is no chance of recovery, commencing liquidation will stop the clock on the DPN and help directors avoid personal liability under certain circumstances. Our in house liquidator will assist you through the process.
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I have been issued a lockdown DPN - what do I do next?Lockdown Director Penalty Notices (DPNs) are issued to directors when a company fails to submit its business activity statements (BAS), instalment activity statements, or superannuation guarantee statements within three months of the due date. Once a lockdown DPN is issued, the penalty becomes fixed, meaning the director is personally liable for the unpaid debt. This liability cannot be removed or cancelled through any other means except by paying off the debt in full. Placing the company into voluntary administration or liquidation will not extinguish this personal liability.
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What are your options once you receive a lockdown DPN?Pay the Debt in Full: The most direct and essential option is to pay off the company’s tax debt in full. This is the only way to clear the liability imposed by a Lockdown DPN. Personal Insolvency Agreement (PIA): This is a legally binding agreement where the director makes a proposal to creditors (such as the ATO) to settle the debts over time or partially. A PIA allows the director to avoid bankruptcy, but it requires the appointment of a bankruptcy trustee to manage the agreement. The trustee will take control of the director's assets and administer the terms of the agreement, including negotiating with creditors. Bankruptcy: If the director is unable to pay the debt or arrange a PIA, declaring bankruptcy may be the final option. In this case, a bankruptcy trustee is appointed to manage the director’s assets and debts. The trustee will oversee the liquidation of assets to pay off the debts and handle communications with creditors, including the ATO.
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How are creditor payments prioritised in liquidation?Payments follow a set order, prioritising employee entitlements and secured creditors before other unsecured debts. Unsecured creditors can file claims and receive distributions based on available funds and the priority order.
What are your options when you receive a DPN?
01
Pay the Debt in Full
The most direct and efficient option is to pay off the company’s tax debt in full.
02
Appoint TTJ advisory to help
Don’t wait until the business becomes unviable. Appointing a TTJ Advisory expert early on can help negotiate with creditors and improve the chances of recovery, while also protecting your personal assets.
Negotiate a Payment Plan
Work with the ATO on a manageable payment plan. TTJ Advisory can assist in presenting your case, helping avoid additional penalties and ensuring compliance.
03
04
Consider Administration
If the debt is overwhelming, entering voluntary administration can allow a TTJ's specialist team to restructure or salvage the business, providing a chance to pay back creditors.
05
Liquidate the Business
When all recovery options are exhausted, liquidation may offer a structured exit, protecting personal assets and addressing outstanding tax obligations under Australian law.
