Quick answer
A director penalty notice (DPN) tells a director they can be made personally liable for certain unpaid company amounts, such as PAYG withholding, GST or super guarantee charge. The ATO generally gives 21 days to act. Depending on the type of notice, paying the debt, entering an arrangement, or appointing an administrator or liquidator can remit the penalty. Fast funding is often used to pay the debt in full within the window.
Key points
- A DPN turns certain company debts into a personal risk for each director.
- The ATO generally allows 21 days from the date of the notice to act.
- Where lodgements were very late, the penalty may not be remitted by appointing an administrator — paying becomes the main way out.
- Property-secured loans of $20k to $250k are possible the same day; larger amounts possible within 24–48 hours.
- Clock
- Generally 21 days from the notice date
- Debts covered
- PAYG withholding, GST, SGC (company amounts)
- First call
- Accountant or insolvency adviser, then the ATO
Why is a director penalty notice an emergency?
Most company debts stay with the company. A director penalty notice is the exception. It puts each director on notice that they can be held personally responsible for certain company amounts the ATO hasn’t been paid — typically PAYG withholding, net GST and super guarantee charge. That means the ATO can pursue the director’s own assets, including their share of a family home.
What turns it into a true emergency is the clock. The ATO generally allows 21 days from the date of the notice for the director to act. Miss it and the options narrow sharply. Many directors lose days because the notice was posted to an old address or sat unopened during a busy week.
What are my options within the 21 days?
Broadly, there are three ways a director can have the penalty remitted, depending on the type of notice:
| Option | What it involves | Works for a lockdown DPN? |
|---|---|---|
| Pay the debt | The company (or the director) pays the amount in full | Yes |
| Payment arrangement | An arrangement with the ATO acceptable to it | Generally treated as a way to deal with the debt, but check with your adviser |
| Administration or liquidation | Appoint a voluntary administrator, small business restructuring practitioner or liquidator | No, where lodgements were more than three months late |
For a “lockdown” notice — where the company didn’t report the relevant amounts within three months of the due date — appointing an external administrator won’t remit the penalty. That leaves payment as the cleanest path for many directors, and it’s why fast funding often enters the picture.
Getting the right advice matters. An accountant or registered insolvency adviser can look at whether the company is solvent and which option fits. If the company is trading and viable, paying the debt with a loan can be a sensible bridge. If it isn’t, borrowing simply moves the problem.
What should I do in the first hour?
- Read the date on the notice and count 21 days forward. Write the deadline on something you’ll see every day.
- Confirm the figure through ATO online services or your tax agent. Separate PAYG withholding, GST and SGC.
- Check lodgement history. Were the BAS and super statements lodged within three months of their due dates? That decides whether it’s a lockdown notice.
- Call your accountant and book an urgent conversation.
- Identify security. If you or a co-director own property with equity, note the address and current loan balance.
Run the emergency triage tool with the “statutory demand or legal notice” option to get a document checklist, or go straight to the 21-day notice deadline page for a day-by-day plan.
How can a fast loan help?
Because a DPN is personal to the director, many directors choose to offer personal property as security. That’s helpful for speed: property-secured lenders focus on the security and the exit, not on company accounts that may be messy after a tough year.
- Fast second mortgage: borrow against equity without refinancing the home loan. Suits larger debts and terms of a year or more.
- Urgent caveat loan: a short-term loan secured by a caveat on title. $20k to $250k is possible the same day.
- Unsecured or cash-flow loan: for trading companies without property, sized on turnover and bank statements, typically $5,000 to $500,000.
Past ATO debt and credit issues are considered case by case. The lender’s main question will be: how will this loan be repaid? Common answers include refinancing to a longer loan once things settle, selling an asset, or a clear schedule of receipts.
Illustrative example: two directors, one notice each
Illustrative only. A Brisbane fit-out company with two directors falls behind on PAYG withholding and GST after a client delays a large progress payment. Each director receives a DPN for around $160,000. Both BAS statements were lodged on time, so administration is technically an option — but the company has solid work booked and wants to keep trading.
One director has a home with good equity. With the accountant’s support, they arrange a property-secured second mortgage that pays the ATO directly within the window. The loan is planned to be repaid from the delayed progress payment and two upcoming contracts. Both penalties are remitted when the company’s debt is paid.
What mistakes do directors make with a DPN?
The same few errors come up again and again:
- Assuming the other director is handling it. Each director gets their own notice and their own exposure. Make sure everyone is on the same page.
- Waiting for the accountant’s next free appointment. Explain that it’s a DPN with a date on it; most advisers will make time.
- Paying part of the debt and stopping. A part payment reduces the exposure but may not remit the penalty. Know exactly what outcome you’re paying for.
- Resigning as a director. Resigning doesn’t simply make existing liabilities disappear. Get advice before considering it.
- Leaving funding to the last few days. Even a fast loan needs ID, title details and signatures. Starting in week one keeps same-day and 24–48 hour options available.
Getting started today
Twenty-one days sounds like plenty until you count the time lost to phone queues, advice appointments and paperwork. Start a 60-second enquiry as soon as you have the notice date and the amount.
There’s no credit check when you first enquire. We don’t hand your details to a list of lenders; one specialist reviews your situation and calls you back. Tell us the notice date, the amount, whether any lodgements were late, and what property is available — accurate details let us pick the right route the first time. If you’re ready, see whether you qualify now.
Frequently asked questions
Does the 21 days start when I open the letter?
No. The ATO generally counts the 21 days from the date of the notice, not when you read it. If it has sat in a mailbox, you may have less time than you think, so check the date immediately.
What is a lockdown director penalty notice?
It's the term commonly used where the company didn't lodge the relevant BAS or super guarantee statements within three months of the due date. In that case, appointing an administrator or liquidator doesn't remit the penalty, so paying the debt or a payment arrangement is usually the focus.
Can a business loan be used to pay a DPN debt?
Yes. Business-purpose loans are commonly used to clear the company's debt to the ATO so the director penalty is remitted. The lender will want to understand how the loan will be repaid.
Can I use my home as security if the debt is the company's?
Yes, directors often offer their home or another property as security for a company loan. It's one of the fastest ways to fund a DPN within the window, because property-secured lending relies less on the company's recent financials.
Should I get advice?
Yes. Speak to your accountant or a registered insolvency adviser quickly, because the right option depends on the company's overall position. Lining up funding at the same time keeps options open.