Quick answer
A director penalty notice (DPN) makes company directors personally liable for unpaid PAYG withholding, GST and super guarantee charge. Directors have 21 days from the date the notice is issued to act. Where the debt was reported late, paying it in full may be the only way to remit the penalty. A private loan secured by property can fund that payment within days.
Key points
- The 21 days start when the ATO posts or delivers the notice, not when you open it
- Late-reported debts can generally only be remitted by full payment
- Resigning as a director doesn't remove liability for existing debts
- Get urgent advice from your accountant or an insolvency professional as well
- Time to act
- 21 days from the notice
- Debts covered
- PAYG withholding, GST, SGC
- Loan size
- $20,000 to $5,000,000
- Speed
- Same day possible to $250k
A director penalty notice is the ATO’s way of moving a company’s tax debt onto the people who run it. Once the 21 days pass, the ATO can pursue directors personally, which can mean your home, your savings and your own credit file. If you’ve received one, act today.
This page explains how a DPN works and how a property-secured private loan can help you respond in time. It isn’t legal or tax advice. Speak to your accountant or an insolvency professional as well.
What a DPN covers
Directors can be made personally liable for the company’s unpaid:
- PAYG withholding (tax withheld from wages)
- GST, including luxury car tax and wine equalisation tax
- super guarantee charge
These personal amounts mirror the company’s debt. A payment by either the company or a director reduces both.
The 21 days, and what you can do in them
The ATO must issue the notice before it can recover the penalty. The 21 days start when the notice is posted or left at the director’s address on the ASIC register, not when you happen to open the envelope.
What you can do depends on when the company reported the debts:
| How the debt was reported | Options within 21 days |
|---|---|
| PAYG withholding or GST reported within 3 months of the due date | Pay in full, appoint an administrator or small business restructuring practitioner, or begin winding up |
| PAYG withholding or GST reported late, or never | Generally only payment in full |
| Super guarantee charge reported on time | Pay in full, administrator, restructuring practitioner or winding up |
| Super guarantee charge reported late, or never | Generally only payment in full |
If full payment is the only realistic route, and you want to keep the company trading, that’s where a private loan comes in.
How a private loan fits
A private lender can lend against property owned by you, by the company or by a related trust, and pay the ATO directly at settlement. On clean residential titles, $20,000 to $250,000 is possible the same day; larger amounts commonly take 24 to 48 hours once valuation and documents are done.
The lender will want:
- A copy of the DPN and a current ATO statement
- Details of the property and any existing mortgage
- ID for all borrowers, directors and guarantors
- A plan to repay, such as a refinance, asset sale or trading income
- Confidence that the company can meet its taxes going forward
That last point matters. If the business can’t keep up with its taxes, borrowing to pay the DPN may only delay a harder decision. An insolvency professional can help you weigh the options honestly.
Don’t wait for day 20
Private lenders can move fast, but valuations, title searches and legal advice all take some time. Enquiring in the first few days gives you room to choose the best structure. Enquiring on day 19 limits you to whatever can settle in 48 hours.
A worked example: the DPN that arrived on holiday
A Bundaberg freight company director returned from leave to find a director penalty notice dated twelve days earlier, covering $185,000 of unpaid PAYG withholding and super guarantee charge. Because the amounts had been reported on time, paying the debt in full within the 21 days, or appointing an administrator or small business restructuring practitioner, would remit the penalty. Nine days remained.
The director and his wife owned their home in Bargara with a small loan against it. A private lender approved a second mortgage of $200,000 within a day, booked a valuation for the next morning, and settled on day 18. The ATO debt was paid in full, removing the personal exposure entirely.
The loan was set for twelve months. The company’s accountant then built a cash flow plan that put PAYG and super into a separate account each pay run, so the debt couldn’t quietly build up again.
What to gather the day a DPN arrives
- the notice itself, with the date it was issued, not the date you opened it
- an integrated client account statement from the ATO showing what’s owed and when
- details of any property you or other directors own and the current loan balances
- the names and contact details of your accountant and any lawyer already involved
- confirmation of whether the amounts were reported on time or lodged late
Late-reported amounts change the options available, so your accountant should confirm this first.
Protect yourself, and the business
Tell us the DPN amount, the date on the notice, the property available and how you’d repay. We’ll tell you quickly whether a loan can be in place in time. There’s no credit check when you first enquire, and your details stay with our desk unless a lender fits.
Please give us the exact notice date and figures so we can plan backwards from the deadline. Start your enquiry now, or read our ATO debt page for the bigger picture, then send it through.
Frequently asked questions
When does the 21-day period start?
From the date the ATO posts the notice to, or leaves it at, the director's address on the ASIC register. That's why keeping your ASIC address current matters. If the notice went to an old address, the clock may already be running.
Can I remit the penalty without paying the full debt?
It depends on how promptly the company reported the debts. If PAYG withholding or GST was reported within three months of the due date, appointing an administrator or restructuring practitioner, or starting a winding up, within 21 days can also remit the penalty. If it was reported late or not at all, generally only full payment will do.
Will a private lender lend to pay a DPN?
Yes, if there's property with sufficient equity and a plan to repay. The lender usually pays the ATO directly at settlement. The property can be owned by the company, by a director personally or by a related trust, with appropriate guarantees.
If I resign, does the notice go away?
No. Resigning doesn't remove liability for debts that fell due while you were a director. New directors also need to act within 30 days of appointment to avoid liability for earlier debts.