We continue to receive requests for more information on the ATOs Director Penalty Regime. So we thought it best for this timely reminder so you don’t get caught out.

As a company director you are responsible for ensuring that the company’s tax and super obligations are reported and paid on time.

Over the last 18 months, the ATO issued 40,000 Director Penalty Notices (DPNs) with another 30,000 expected by June 30 this year.

Not to be baulked at.

DPNs are the ATOs way of personally collecting outstanding company taxes from directors.

Once a DPN expires (21 days from the date on the notice), the ATO can enforce liabilities for outstanding PAYG withholding, net GST and superannuation guarantee charge amounts.

It’s important to note that while this seems quite simple, these taxes came under the regime at different points.

  • PAYG: No time limit (could go back as far as 12 years)
  • Superannuation: From 1 April 2012
  • Net GST: From 1 April 2020

Whilst the company is liable for interest and penalties on outstanding PAYG and net GST, the director isn’t. However, directors who are issued DPNs for superannuation are liable for the ongoing interest and penalties on that outstanding super.

The longer this is left, the higher the penalty becomes.

How are DPNs received?

The DPN is sent to the director via their residential address as recorded on the ASIC register.

The ATO doesn’t have to prove the director received the notice, just that the ATO sent the notice to the residential address on the ASIC register.

Additionally, the ATO is also posting the DPNs on the director’s MyGov account and tax portal, but it is not automatic.

Our hot tip to avoid being caught out?

Keep your address details up to date on the ASIC register.

That way, you can be assured you won’t be missing any correspondence from the ATO and end up with nasty penalty.

If you are concerned about your company’s ATO debts then get in touch with us and make an appointment with us early so we can explore options available to you.