Director Penalty Notice: What to Do in the 21 Days After You Get One

Director Penalty Notice: What to Do in the 21 Days After You Get One

If you've received a Director Penalty Notice, you generally have 21 days from the date on the notice to act — pay the debt, or appoint a Small Business Restructuring practitioner, a voluntary administrator, or a liquidator. On a non-lockdown DPN, taking one of those steps in time cancels your personal liability. Miss the window and you can be left personally on the hook. So the first job is simple: work out which type of DPN you're holding, today.

Here's how the 21 days actually work, and the moves that protect you.

The clock starts on the date of the notice — not the day you open it

This is what catches directors out. The 21 days run from the date the ATO puts on the notice, not the day it lands in your letterbox. By the time you're reading it, part of the window may already be gone. Treat the day you open it as day one of a very short race.

Step 1 — Find out if it's lockdown or non-lockdown

Everything hinges on this.

• Non-lockdown DPN — the company lodged its BAS, IAS and super obligations on time but didn't pay. You still have the full set of options to cancel personal liability.
• Lockdown DPN — the returns weren't lodged within three months of their due date. The rules are much tougher, and appointing an administrator or liquidator won't remove your personal liability.

Your lodgement history decides which one you've got.

Step 2 — Know your four options (non-lockdown)

Within the 21 days you can:

• Pay the debt in full.
• Appoint a Small Business Restructuring practitioner — keep control, keep trading, propose a plan.
• Appoint a voluntary administrator — a formal pause to restructure or sell.
• Appoint a liquidator — wind up on your terms if that's genuinely the best move.

Any one of these, started inside the 21 days, remits the penalty on a non-lockdown DPN. Doing nothing is the only option that guarantees personal liability.

Step 3 — Get the right people in the room, fast

You don't have time to work this out alone. The quickest first move is a conversation that classifies your DPN correctly, pulls your ATO lodgement history, and maps which option fits — before the window closes.

Common questions

How long do I have to act on a DPN?

Generally 21 days from the date on the notice. It runs from the ATO's date, not the day you receive it, so act the moment you open it.

What happens if I ignore it?

After 21 days with no action you can become personally liable for the company's PAYG withholding, GST and super amounts, and the ATO can come after your personal assets.

Can I just set up a payment plan?

A payment plan can stop further enforcement, but on its own it doesn't cancel a DPN. On a non-lockdown DPN you still need one of the four actions inside 21 days.

Where I fit

I'm not a liquidator or trustee, and I don't take a referral fee. I read the notice with you, confirm lockdown vs non-lockdown, lay out the real options in plain English, and coordinate the right registered practitioner if a formal step is needed — all inside your 21 days. In 36 years I've never once heard someone say they acted too early.

Received a DPN? Don't wait out the clock. Book a phone or video time at resolvency.com.au/book or call 0457 099 099.

General information only — not financial, legal or tax advice. Everyone's position is different, so get advice specific to yours before you act.

Related service: ATO Debt & Payment Pressure — see how I can help.