Respond to a Director Penalty Notice
A company tax debt has just become your debt, and the clock is running.The notice in your hand moves your company’s unpaid PAYG, GST or superannuation onto you personally. Which of your options survive depends on the type of notice and on 21 days that started running when it was dated, not when it reached you. We work out which notice you have, protect whatever responses are still open, and deal with the ATO from there. You find out where you actually stand today, rather than after the window has closed.
The right notice identified
A lockdown notice and a reported-debt notice call for different responses, and only one of them can be answered by an appointment.
The 21 days used, not lost
The deadline runs from the date on the notice, so the work starts the day you instruct us rather than the day you stop worrying.
Your position, not the company's
We act for you as director, which matters once your interests and the company's stop pointing the same way.
What is a Director Penalty Notice and what does it do?
A Director Penalty Notice makes a director personally liable for a company’s unpaid PAYG withholding, GST or superannuation guarantee amounts, and it comes in two forms. If the company reported the amounts on time, the notice gives you 21 days to act. Paying, appointing a voluntary administrator or a small business restructuring practitioner, or beginning a winding up will each remove the liability. If the amounts were not reported on time, it is what is commonly called a lockdown notice, and payment is the only thing that discharges it. The regime, and the small number of defences available to a director, sit in the Taxation Administration Act 1953 (Cth) (the Act).
What is the difference between a lockdown and a standard Director Penalty Notice?
It depends on whether the company reported the amounts on time. If it did, you have 21 days to remove the liability by paying, appointing an administrator or a restructuring practitioner, or beginning a winding up. If it didn’t, the notice is a lockdown notice and only payment discharges it.
When do the 21 days start?
From the date on the notice, not the date you received it or opened it. The ATO posts it to the address recorded for you on the ASIC register, so a notice sent to an old address still runs. Check the date on the notice before anything else.
Are there any defences to a Director Penalty Notice?
There are, but they are narrow, and they have to be evidenced rather than asserted. The main one is that illness or another good reason kept you out of the company’s management at the relevant time. The other is that you took all reasonable steps to have the amounts paid, or the company placed into administration or liquidation.
Can I be liable for tax debts from before I became a director?
Yes, in some circumstances: a new director can become liable for amounts that were already outstanding at the date of appointment. Liability attaches if they are still unpaid after a set period following it. If you have recently joined a board, this is worth checking before a notice arrives rather than after.
Not sure which kind of notice you have received?
Send us the notice and we will tell you which type it is, what the real deadline is, and which options are still open to you. That is a short conversation, and it decides everything that follows.
Limited liability was the point, and this notice sets it aside
A Director Penalty Notice makes you personally liable for money the company owes, and your home and savings are on the other side of that line. You have 21 days from the date on the notice, not from the day you read it, and the step that protects you depends on which type of notice it is. Most directors can’t tell which type they have, which means they can’t tell what to do with the time they have left.
- We will identify which type of notice you have and the date it expires.
- We will tell you which responses can still remove your personal liability.
- We will assess and evidence any statutory defence available on your facts.
- We will take over all dealings with the ATO from the day you instruct us.
You took on a director's risks, not the company's tax debts
You agreed to be a director of a business you helped build, on the understanding that the company’s debts were the company’s. Trading got difficult, the bookkeeping slipped behind, and tax that had been withheld or reported went unpaid while you kept the business going. Then a notice arrived, addressed to you at the address ASIC has on file, for an amount that is a company amount and is now yours. It is the same sum it always was, and overnight it is standing between your family and the house.
What's included in your Director Penalty Notice response service
- Identification of the notice type and the exact date the 21 days expire.
- Assessment of the statutory defences available on your facts.
- Advice on administration, restructuring and winding up as responses to the notice.
- All correspondence and negotiation with the ATO on your behalf.
- Preparation and lodgement of the documents each option requires.
After 21 days, liability stops being the question
The 21 days are not a grace period, they are the whole of your choice. Let them pass on a reported-debt notice and the responses that would have removed the liability, appointing an administrator or a restructuring practitioner or beginning a winding up, are simply gone, and the debt is yours whatever the company does afterwards. From there the ATO has the same collection tools it uses against anyone: a garnishee notice to your bank or your employer, a caveat over your property, a departure prohibition order stopping you leaving the country, and bankruptcy proceedings at the end of it. The general interest charge keeps running on the amount, and since July 2025 it is not deductible. And nothing obliges the ATO to wait while you work out that the notice was real.
How we get the liability back off you
The first hour matters more than the rest of the file. We identify which notice you have, calculate the real expiry date from the date on the notice, and tell you which responses are still capable of removing the liability. Where a defence is genuinely open, that illness or another good reason kept you out of the company’s management, or that you took all reasonable steps to have the amounts paid or the company placed into administration, we evidence it and put it to the ATO rather than asserting it. Where the answer is a company step instead, we get it done inside the window and make sure it is the step the notice actually requires. What changes for you is that the outcome stops depending on a deadline you didn’t know about and starts depending on a decision you made with advice.
What happens when a notice lands
The first 21 days decide the rest of it.Read the notice
We confirm which type of notice you have and calculate the date the 21 days actually expire, which is rarely the date you assumed.
Preserve your defences
We identify every response still capable of removing the liability, and get the one that fits your situation done inside the window.
Deal with the ATO
We take over the correspondence, put your defences with the evidence behind them, and negotiate the position from there.
Advice for the director, not for the company that owes the money
Directors tell us the same thing when they ring about a notice: they weren’t hiding anything, they were trying to keep the business alive, and paying suppliers and wages came before paying the ATO. That is understandable, and it is also the conduct the director penalty regime was built to reach, which is why the notice reads like a punishment for the thing you thought you were doing right.
We act for the director, and that matters, because your position and the company’s stop being the same thing the moment a notice is issued. We have a Chartered Tax Advisor with The Tax Institute on the team, a credential held for twenty-five years, and we are ISO 9001 accredited, so what is happening on your file and when you will hear about it are defined rather than assumed.
Our great lawyer guarantee
Six principles we hold to, whatever you bring us and however long it takes.
Take the time
We listen carefully to understand what you want to achieve, then step you through the advice and the documents.
Share our knowledge
We pass on as much as we can, so you can make your own informed decisions.
Stick to our knitting
We only do what we are good at, so you never pay for our learning.
Work as one team
Someone is always available to answer your question or point you the right way.
Fair pricing
A fixed or capped quote for advice and documents, so you do not carry the price risk.
It is your show
We are in it for a front row seat to witness your success, not for our egos.
Send us the notice today
Tell us the date on the notice and what it covers. We will tell you which type it is, how many of the 21 days are left, and which options can still remove the liability.
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