Have you received a Director Penalty Notice? Act fast to protect yourself. Call or email Aitken Whyte Lawyers for expert legal help.
Over the past 12 months, the Australian Tax Office (ATO) has been more active in its debt collection activities, leading to increasing financial pressure on businesses.
A Director Penalty Notice (DPN) is a formal notice issued by the ATO to company directors, requiring them to address outstanding company tax debts. The notice can make the director personally liable for certain company liabilities, including PAYG withholding, GST, and superannuation debts. Directors issued with a DPN must act quickly, as it may still be possible to mitigate serious financial consequences.
Directors must act within 21 days from the date specified in the notice. If no action is taken within this time, personal liability will automatically apply.
The ATO can issue either a lockdown or a non-lockdown DPN. Knowing the difference between these DPNs is critical in identifying the next steps.
A lockdown DPN places immediate personal liability on the director for the debt, regardless of any action taken. Once issued, the only option is to pay the debt.
A non-lockdown DPN provides the director with three options to potentially avoid personal liability.
The small business restructuring process allows directors to retain control of the company under the guidance of a restructuring practitioner, providing an opportunity to pay off the debt within 3 years.
For further information on liquidation and voluntary administration, read our article on Liquidation.
A key distinction lies in the timeliness of the company’s tax obligation lodgements. The ATO will issue a lockdown DPN if the company has failed to lodge its obligations within the specific time limits of:
If you’re uncertain about which type of DPN you’ve received, it’s crucial to consult with a lawyer. Delays in acting will automatically trigger personal liability.
Contact Aitken Whyte Lawyers to discuss your options with an experienced insolvency lawyer.
Even though companies often rely on their accountants to manage lodgements, directors are ultimately responsible for ensuring that all obligations are lodged on time. Once a DPN is issued, there is no room for error, even for small amounts of debt.
In rare cases, the ATO may allow defences to a DPN.
The possible defences include:
However, these defences are narrow and rarely successful. Directors must prove their actions were reasonable, and the threshold is high. Seeking legal advice is crucial if you wish to explore a potential defence.
Experienced guidance can make all the difference when seeking to use one of these defences. Contact us to speak to an insolvency lawyer about your situation.
Receiving a DPN is a serious matter that requires immediate attention. Directors must fully understand their situation, available options, and the steps needed to avoid personal liability. Failing to comply with the requirements or missing deadlines can lead to severe financial consequences. If you have been issued with a DPN or believe there is a risk of being issued with a DPN, it is vital to seek legal advice.
Aitken Whyte Lawyers has an experienced team of solicitors who handle insolvency and debt recovery matters. If you would like to discuss your situation with our team, please contact our office on 07 3229 4459.
It is essential that you have experienced solicitors when facing the consequences of a Director Penalty Notice. The risk of personal liability for company tax debts is too serious to take lightly. Our corporate insolvency lawyers will ensure you are fully apprised of all your options.
Aitken Whyte Lawyers Brisbane are focused on results. Our solicitors are experienced in debt recovery matters and can assist you with all aspects of responding to a DPN. Call today to discuss your situation and obtain expert legal advice.
Brisbane
Aitken Whyte Lawyers Brisbane
2/414 Upper Roma Street
Brisbane QLD 4000
