What to do if you receive a DPN (Director’s Penalty Notice) from the ATO?
Read the DPN carefully
Note the issue date — the 21-day deadline starts from the date on the letter, not when you receive it.
Check whether it’s a Lockdown or Non-Lockdown DPN
If Lockdown: You’re personally liable.
If Non-Lockdown: You have options.
Seek professional advice immediately
Contact a qualified insolvency practitioner or restructuring advisor — delays can cost you personally.Consider your options
Pay the debt in full
Appoint a Voluntary Administrator or Liquidator within 21 days (Non-Lockdown only)
Negotiate a repayment plan (Note: This does not stop director liability)
Don’t resign as director
Resignation won’t remove your liability if you were a director when the debt arose.
What If You Can’t Pay?
If your company is insolvent or can’t repay the debt:
A Small Business Restructure (SBR) may be an option — allowing directors to avoid personal liability if initiated early enough.
For more severe cases, voluntary administration or liquidation may be necessary.
SBR is only an option if the business meets ATO and ASIC eligibility and hasn't received a lockdown DPN yet.
How to Avoid a DPN in the Future
Lodge BAS and Superannuation returns on time, even if you can’t pay.
Stay up to date on company tax obligations.
Monitor business cash flow and debt regularly.
Work with a qualified accountant or advisor.
Act early at signs of financial trouble — the longer you wait, the fewer options remain.
References
ATO: Director penalties
Australian Government Treasury: Insolvency reforms for small business
Hall & Wilcox Lawyers: Understanding DPNs and Director Risk
LegalVision: DPN Guide for Directors
Final Thoughts
A DPN is not just a warning — it’s a legal action that can affect your personal finances, credit history, and future as a director. If you receive one, act fast and get the right advice. Often, directors wait too long and end up losing protections they otherwise could have used.
