Quick answer
Through a director penalty notice, the ATO can hold directors personally responsible for a company's unpaid PAYG withholding, GST and super guarantee charge. Recovery against the director can begin once 21 days have passed since the notice was issued. Paying what the company owes in full is one way to have the penalty remitted, and where reporting was late it is the only way. A loan secured over property can provide that money fast.
Key points
- A DPN reaches unpaid PAYG withholding, GST and super guarantee charge
- Recovery can start once 21 days have passed since issue
- Late-reported debts can only be remitted by paying in full
- A secured loan can pay the ATO straight from settlement
- Take professional advice on your own notice straight away
A notice unlike any other
In normal circumstances a company’s debts stay with the company. A director penalty notice breaks that rule for certain tax debts by making the directors answerable for them personally. Once the penalty can be recovered, the ATO may chase the director directly, using garnishee notices, offsetting the director’s own tax refunds, or going to court.
For many directors, that is the moment the family home starts to feel at risk. A DPN calls for action the day it arrives, and the first job is working out which kind of notice you are holding.
Which kind of DPN is it?
The table below is a general summary only; get professional advice on your own notice.
| How the debt was reported | Ways to have the penalty remitted inside 21 days |
|---|---|
| GST and PAYG withholding reported no later than three months after falling due | The company pays, goes into administration, appoints a small business restructuring practitioner or is placed into liquidation |
| GST and PAYG withholding reported later than that, or not at all | Full payment of the company’s debt, nothing else |
| Super guarantee charge reported by its due date | Any of the same four routes |
| Super guarantee charge reported late or never | Full payment only |
The second and fourth situations are what people usually mean by a lockdown DPN. In those cases, appointing an administrator or liquidator leaves the director still liable, and payment is the one way out.
Where a secured loan fits
A loan secured over property can raise the full company liability and send it straight to the ATO at settlement. Directors commonly offer their home or an investment property, either through a second mortgage behind the current loan or through a caveat when time is shortest. With interest prepaid or added to the loan, nobody has to find monthly repayments while the business recovers.
Tell us what the notice says and when it expires: tell us about your DPN and deadline now and a specialist will ring you back promptly.
Working inside the 21 days
The count begins when the ATO posts the notice or delivers it to your ASIC-registered address. Mail can be slow, and an address that was never updated can swallow days. Look at the issue date and assume you have less time than it seems.
- Identify which debts and amounts the notice lists.
- Ask your accountant or adviser which kind of DPN you have.
- Decide whether full payment is the right response.
- If it is, send us the amount, the deadline and the property available as security straight away.
- Let the ATO know what you are doing.
How the loan is repaid
Most of these loans are cleared by selling a property, by refinancing once the company is back on track with its lodgements, or from trading income during the term. Pick a realistic term, and remember the loan is flexible if the exit takes longer than planned.
An illustrative DPN response
Illustrative only. A director of a Newcastle labour hire firm is served a DPN for PAYG withholding and super guarantee charge that went in late during a hard year, so full payment is the only way to have it remitted. About two weeks remain. A caveat loan over his investment unit is approved, and within days the money is paid straight to the ATO and the penalty is remitted. The firm trades well over the next year, and he sells the unit as planned to repay the loan.
Joining a board
Someone newly appointed as a director has 30 days to make sure the company pays the relevant debts, appoints an administrator or restructuring practitioner, or is wound up. If none of those happens, they can become liable for amounts that built up before they arrived. Anyone accepting a directorship should look at the company’s tax position on day one.
Stopping the next notice
- put PAYG withholding and super into a separate account as they arise
- lodge activity statements and super guarantee charge statements on time even if you cannot pay
- get ready for Payday Super, which from 1 July 2026 requires contributions to land in employees’ funds within seven business days of each payday
- contact the ATO early when cash gets tight
For more on prevention, read director penalty notices explained.
If the company cannot be saved
Occasionally a DPN arrives when the business is past rescuing. If the debts were reported on time, appointing an administrator or small business restructuring practitioner within the 21 days may still be possible, and ASIC publishes plain-language guides to both. If the notice is the payment-only kind, paying may still be the director’s best personal protection even though the company will not continue. Speak to an accountant or registered insolvency practitioner before you decide.
Act before day 21
A DPN ranks among the most serious letters a director will ever open, yet it can be resolved when the money is lined up in time. Give us the amount on the notice, its issue date and the property you can offer, and a specialist will tell you what can be done before the deadline. Your first enquiry involves no credit check, your details are not shared around, and complete information lets us move as fast as your notice demands. Get help with a DPN.
Frequently asked questions
What debts does a director penalty notice cover?
Three company liabilities: unpaid PAYG withholding, GST and super guarantee charge. The ATO's director penalty regime page sets out the detail.
How long do I have after receiving a DPN?
Twenty-one days from the date of issue. The count starts when the ATO posts the notice or leaves it at your ASIC-registered address, which may be well before you actually see it.
What are the options to remit a director penalty?
If GST and PAYG withholding were reported no more than three months after their due dates, the company has four options inside the 21 days: pay in full, appoint an administrator, appoint a small business restructuring practitioner or go into liquidation. If reporting was later than that, or never happened, full payment is the only option.
Can a loan be secured over my home to pay a DPN?
Yes. Directors often use a second mortgage or caveat over their home to raise the money and pay the company's liability quickly.
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