A director penalty notice (DPN) is a legal notice issued by the Australian Taxation Office (ATO). It makes directors of a company personally liable for certain debts of the company to the ATO in specific circumstances.

If a director receives a Non Lockdown DPN, the notice can be resolved satisfactorily in a few ways. These include payment (which may not be practical due to lack of funds) or by putting the company into liquidation, voluntary administration, or a small business restructuring (if eligible) – typically within 21 days of receiving the notice. If these steps are taken, the director will not be personally liable for the debt.

If, however, the notice is a Lockdown DPN, the only way it can be satisfactorily resolved is by payment – which, as previously mentioned, may not be possible due to a lack of funds.

At present, how does the ATO decide whether a director will get a lockdown or non-lockdown DPN notice? 

The company’s GST and PAYG withholding information must be lodged with the ATO within three months of the deadline. If this is done, any future issued DPN will be a non-lockdown DPN. 

Additionally, superannuation must be reported to the ATO within 28 days of the end of the quarter. If this is done and a DPN is issued, it will be a non-lockdown DPN. 

However, if these lodgement times are not met and GST/POIG lodgements are done more than three months after the required date, or superannuation is reported more than 28 days after the end of the quarter, then any DPN issued will be a lockdown DPN.