Prepared by Resolvency – Trusted Insolvency AdvisoryDownload our DPN action guide

Why This Matters

The ATO is increasing enforcement around GST and PAYG. Late BAS lodgements can trigger personal liability for directors. If the BAS is not lodged on time, the director is already exposed — before the notice even arrives.

2. The Three Types of DPNs

Non-Lockdown DPN

When it is issued

·BAS HAS been lodged

·Lodgement is:

oOn time, or

oWithin the acceptable window (generally within 3 months)

·BUT the debt remains unpaid

Why the ATO issues it

This is essentially: “You’ve told us what you owe — now we want it paid.”

The ATO’s thinking:

·The company is still engaging

·Records exist

·There’s still a chance to recover through formal insolvency pathways

What the ATO is trying to achieve

·Force action quickly

·Push the director to:

oPay

oOr formally deal with the company (VA or liquidation)

Doug’s translation

“You’ve done the paperwork — now we’re turning up the heat.”

• BAS lodged on time
• 21 days to act
• Can avoid liability via liquidation or payment

Lockdown DPN

When it is issued

·BAS NOT lodged within required timeframe

·Typically, more than 3 months overdue

Why the ATO issues it

This is a very different mindset:

“We don’t trust the reporting — so we’re going straight after the director.”

The ATO’s concerns:

·No visibility of true debt

·Possible phoenix behaviour

·Loss of control over the situation

What the ATO is trying to achieve

·Protect revenue immediately

·Bypass the company structure

·Lock in personal liability

Key point

The penalty is effectively triggered by:

Failure to lodge — NOT failure to pay

Doug’s translation

“You didn’t lodge — so we’re not giving you a way out.”

• BAS not lodged on time
• Director immediately liable
• No escape via liquidation

21-Day Lockdown DPN

When it is issued

·BAS was not lodged on time (so it’s already a lockdown situation)

·BUT the ATO now issues a notice that:

oLooks like a standard DPN

oIncludes a 21-day period

Why the ATO issues it

This is about collection efficiency, not fairness.

The ATO is:

·Standardising notices

·Giving a short window before enforcement

·Moving faster to recovery action

What the ATO is trying to achieve

·Prompt immediate payment

·Create urgency

·Move quickly to:

oGarnishee notices

oDirector recovery action

The trap (this is critical)

Most people read it as:

“We’ve got 21 days to fix this”

Reality is:

“You’re already personally liable — this is your warning before we act.”

Our translation

“The game’s already over — this is just the countdown.”

• Looks like a 21-day notice but liability already exists
• 21 days is not a protection period – it is only a collection window
• No protection available

Lodgment Timing → Outcome

BAS Lodged On Time → Options Available → Possible Restructure
BAS Lodged Late → Lockdown DPN → Personal Liability

BAS Lodgement

Outcome

On Time

Options Available

Late

Lockdown DPN ®Personal Liability

Lodgement is the single biggest factor that determines whether a director can be protected.

ATO Pressure → Director Exposure

ATO Debt Increases → Lodgements Missed → DPN Issued → Personal Liability → Recovery Action

Stage

Result

Debt Increases

ATO Attention

Missed Lodgements

DPN Issued

No Action

Personal Recovery

By the time the client calls, the damage is often already done.

Simple Comparison (How to Explain It Fast)

Type

Lodgment Status

Director Outcome

ATO Intent

Non-Lockdown

Lodged

Can avoid liability

Push action

Lockdown

Not lodged

Automatically liable

Protect revenue

21-Day Lockdown

Not lodged

Already liable

Accelerate recovery

The Real Issue (What Actually Drives All of This)

It’s not the debt.

It’s this:

Lodgement behaviour is what determines whether the director is protected or exposed.

How to Explain This to Clients

You can use this:

“If the BAS is lodged, we’ve got options.
If it’s not lodged, the ATO has already decided the director is on the hook.”

Final Practical Insight

·A client can owe $500k and still be okay structurally (if lodged)

·A client can owe $50k and be personally exposed (if not lodged)

Accountant Checklist

✔ Ensure BAS is lodged on time
✔ Do not delay lodgements due to inability to pay
✔ Identify early warning signs
✔ Refer clients before DPN issued
✔ Treat all DPNs as urgent