A director penalty notice is issued to a director(s) of a company that has failed to comply with its tax obligations with respect to the Superannuation Guarantee Charge (SGC) and the Pay As You Go (PAYG) regime. Director penalty notices take on two forms.

The first style of DPN allows a director 21 days to pay the debt owed will come to an arrangement with the ATO. Alternatively, the director may appoint an administrator and will not be personally liable. The second style of DPN is referred to as a lock down DPN and will not allow a director to avoid personal liability. This will be the case when there are outstanding lodgments for three months after the due date and automatically binds the director as liable regardless of whether or not the director has received a DPN at that time.

There are some defences available, for example if the director is ill and not involved in the management and the company and it was reasonable not to expect the director to take part in the management of the company because of that illness it may be that the liability is not imposed on the director personally. A further defence may be that a director can demonstrate that that all reasonable steps were taken to ensure that the company was compliant that an administrator was appointed, although there are some limitations to this defence.

CharterLaw Legal has extensive experience in dealing with Director Penalty Notices by utilising a solid network of high ranking contacts within the ATO to achieve results that can only be obtained by tax professional who understand ATO policies and procedures. Working constructively with the ATO in way that robustly protects your interests can result in a negotiated settlement with the ATO.