Director Penalty Notice (DPN): Why Acting Early Matters (and What To Do Next)
Last updated: 13 January 2026
Written by: Michael Pajar, Director & Business Finance Broker, Casey Asset Finance
If you’ve received a Director Penalty Notice (DPN), it can feel like the floor drops out.
But a DPN doesn’t mean it’s “game over”.
It means the ATO is putting real pressure on the people behind the business — and time now matters.
This guide explains:
what a DPN is (in plain English)
what’s actually at risk
what to do in the next 24–48 hours
when refinancing ATO debt can help (and when it won’t)
Confidential • No obligation • Consent-first process
Disclaimer: This article is general information only and does not constitute legal, accounting, or tax advice. Please seek independent advice for your circumstances.
This post will not cover:
Specific advice for your circumstances, legal strategy, or anything you should do next.
Quick answer (for stressed readers)
A DPN is a formal notice that can make you personally responsible for certain company tax debts — commonly PAYG withholding and super obligations.
If you act early, you often have more options.
If you wait, options can narrow fast.
If you’ve received a DPN, the smartest move is usually this:
Confirm what type of DPN it is
Get your lodgements up to date
Choose a path quickly (payment plan, refinance, restructuring, or another solution)
Are you losing sleep over a DPN?
If you’re reading this late at night, you’re not alone.
Most directors replay the same questions:
“Can the ATO come after me personally?”
“Can I lose my assets?”
“Is there a clean way out of this?”
A DPN is serious — but it’s also a signal: act now, before it escalates.
What is a Director Penalty Notice (DPN)?
A Director Penalty Notice is an ATO notice that can make a company director personally liable for specific company tax debts (most commonly PAYG withholding, and super-related obligations).
It’s designed to stop situations where businesses collect money (like PAYG withholding) but don’t pass it on.
The two types you’ll hear about
Most people talk about:
Standard DPN (you usually have a short window to act after it’s issued)
“Lockdown” DPN (often linked to late lodgements — options to fix it can be more limited)
(Exact treatment depends on the facts and timing — get advice.)
Why this becomes personal (fast)
A DPN is not just “business paperwork”.
It’s the ATO saying:
“If the company can’t pay, we may pursue the director personally.”
That’s why doing nothing is usually the worst option.
What can happen if you ignore a DPN?
Ignoring a DPN can lead to consequences that go beyond the debt itself:
enforcement action can escalate quickly
stress and distraction can crush decision-making
access to finance can tighten
suppliers can reduce terms (or cut you off)
Most importantly: waiting rarely improves your options.
The hidden traps directors often miss
When a DPN lands, most directors focus only on the ATO.
But the damage can spread.
1) Supplier terms can tighten overnight
Suppliers may run credit checks or hear rumours. Terms can shrink when you need them most.
2) Your credit profile can be affected
Even without formal insolvency, tax arrears and enforcement action can impact your ability to borrow later.
3) A payment plan can feel safe… until it isn’t
A plan can help — but if the business is already tight, one missed payment can restart pressure.
4) Interest and penalties can keep building
ATO charges can compound and change over time. (Always check current ATO settings and get advice.)
Bottom line: time is an asset.
What to do in the next 48 hours (exact checklist)
If you want a good chance of a clean outcome, do this in order:
Step 1 — Confirm what you received
Get a copy of the DPN letter (PDF)
Confirm the issue date and what debts it relates to
List the debt types (PAYG, super, GST, other)
Step 2 — Get lodgements up to date (even if you can’t pay yet)
Late or missing lodgements can remove options and reduce flexibility.
Step 3 — Speak to your accountant (and legal advice if needed)
This is the “don’t guess” moment.
A 20-minute call can save months of damage.
Step 4 — Build a simple “cash reality” snapshot
You only need three numbers:
average turnover
average wages + rent + key costs
average repayments on existing commitments
what you can realistically pay weekly/monthly toward the tax debt
Step 5 — Choose a path quickly (don’t drift)
Your main paths are usually:
ATO payment plan (if cash flow can actually hold it)
Refinance / consolidate ATO debt (if the business is viable and supportable)
Restructuring options (if the business can’t carry the debt as-is)
Asset sale / clean-up strategy (sometimes the simplest move)
Step 6 — If you want to explore refinance, gather these upfront
To move fast, you typically need:
6+ months of business bank statements
an ATO account summary / portal screenshot (what’s overdue)
a simple explanation of what caused the arrears (one paragraph)
Why refinancing ATO debt can be the smartest move (when it suits)
For some businesses, refinancing ATO debt isn’t about “more debt”.
It’s about buying time and stability so the business can recover.
Refinancing can help when:
the business is still trading and has real income
the problem is timing/cash flow (not total collapse)
there’s a plan to prevent arrears returning
you need repayments that match reality (not wishful thinking)
Refinancing may allow:
one consolidated repayment instead of constant ATO pressure
improved cash flow breathing room
fewer “surprise” enforcement spikes
a path to rebuild and later refinance again (when stronger)
Important: every situation is assessed on its own facts. No guarantees. No pressure.
Why the “longer term” can be a game-changer (for the right borrower)
Most ATO plans are designed to clear debt quickly.
But some businesses simply can’t handle big monthly payments while also paying staff, suppliers, rent, and stock.
In some cases, a longer-term structure (where appropriate) can:
reduce the monthly strain
stop the constant crisis cycle
give the business time to return to stable trading
This only works when the business is viable and the numbers stack up.
See your options — without pressure
If you’re dealing with a DPN or ATO debt, you don’t have to figure it out alone.
If you want, you can do a quick confidential check so we can tell you what refinancing options may be available (if any) — and what a realistic next step looks like.
Confidential • No obligation • Consent-first process
Prefer to speak first?
Text “ATO” and just your first name to 0450 622 115 and I’ll reply with a time convenient to you.
Case study
Case study: $700k ATO debt + DPN — stabilised with a workable structure
A director came to us after receiving a DPN and facing serious ATO pressure. The debt had built up to around $700,000 after a tough trading period.
What mattered most wasn’t “the rate”. It was stopping the spiral and getting repayments to a level the business could actually sustain.
What helped in this scenario:
consolidating the ATO pressure into a structured repayment plan
improving day-to-day cash flow so the business could keep trading
What was the outcome:
pressure reduced
business kept operating
the director regained control and clarity
(Every outcome depends on the facts, timing, and lender assessment.)
Comparing your options (simplified)
Option 1: Refinancing
Can help if the business is viable and repayments are realistic.
can reduce immediate pressure
can create a structured path forward
still requires discipline to prevent arrears returning
Option 2: ATO payment plan
Can work if cash flow can truly hold it.
simplest path when affordable
risky if the business is already stretched
Option 3: Restructuring / formal options
Sometimes the right call when the debt can’t be carried.
may protect the business in a different way
get professional advice early
Option 4: Doing nothing
Usually the highest risk path.
pressure tends to escalate
options tend to shrink
FAQs
How long do I have to act after a DPN?
It depends on the notice type and timing. Don’t guess — confirm the notice details and get advice quickly.
Can a DPN make me personally liable?
A DPN can expose directors to personal liability for certain company obligations, including super-related obligations.
Does refinancing remove the DPN?
Refinancing doesn’t “erase” the past. The goal is to resolve the underlying debt pressure with a workable structure (subject to assessment and advice).
Will my credit be checked if I enquire?
If you submit the form, we can review what you share first. If any credit checks are needed later, we’ll ask for consent before proceeding.
What documents should I have ready?
Start with 6+ months of business bank statements, your ATO position (what’s owed and what’s overdue), and a short explanation of what caused the arrears.
What if my business is behind on lodgements?
Getting lodgements up to date can be critical. Late lodgements can reduce flexibility and limit certain outcomes.
Related resources (internal links)
If you’re dealing with ATO pressure, these may help next:
Want a clearer next step?
If you’d like, you can check eligibility and I’ll tell you what looks realistic (and what to avoid).
Many situations involving ATO debt or a Director Penalty Notice are assessed under bad credit business lending, even if the business is still trading.
Confidential and judgement-free
No obligation
Consent-first process
Australian SME specialist
Clear next steps (even if the answer is “no”)
Prefer to talk first?
Text “ATO” and just your first name to 0450 622 115
