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Navigating Director Penalty Notice in Australia: Protect Yourself from ATO Liabilities
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Key Insights
A company tax liability can become a director’s personal liability. Directors may assume that PAYG withholding, SGC or GST liabilities sit only with the company. The Director Penalty Notice regime can change that. If the relevant obligations are not met, the ATO may pursue directors personally.
The type of DPN matters. Lockdown and non-lockdown DPNs create different risk profiles. The distinction affects what options may be available once a notice is issued, and why directors need to act quickly rather than assuming the issue can be resolved later.
The 21-day deadline leaves little room for delay. Once a Director Penalty Notice is received, timing becomes critical. Directors should promptly identify the type of notice, the liabilities involved and the practical steps available. Delay can reduce options and increase the risk of personal exposure.
A company tax debt can become a director’s personal problem.
When a company fails to meet certain tax obligations, the consequences for directors can be personal and severe. Under the ATO’s Director Penalty Notice regime, directors may become personally liable for unpaid PAYG withholding, Superannuation Guarantee Charge liabilities and GST amounts.
In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Director Seamus Ryan and Senior Associate Sascha Kenny to discuss Director Penalty Notices in Australia, including the difference between lockdown and non-lockdown DPNs, and the practical steps directors can take within the strict 21-day deadline.
The discussion covers:
- how the ATO’s Director Penalty Notice regime operates;
- when company tax liabilities can become personal liabilities for directors;
- the difference between lockdown DPNs and non-lockdown DPNs;
- why the 21-day deadline matters;
- unpaid PAYG withholding liabilities;
- Superannuation Guarantee Charge liabilities;
- GST director personal liability;
- practical steps directors can take after receiving a DPN; and
- why directors need to understand the regime before ATO liabilities escalate.
A practical discussion for company directors, business owners, accountants and advisers dealing with unpaid PAYG withholding, SGC, GST, ATO liabilities or director exposure.
For advice on Director Penalty Notices, ATO liabilities or director exposure, contact Velocity Legal’s Insolvency team.
This podcast in no way constitutes legal advice. It is general in nature and is the opinion of the author only. You should seek legal advice tailored to your individual circumstances before acting on anything related to this podcast.
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