Director Penalty Notices: the 21-day period and your options

What is a DPN?

Division 269 of Schedule 1 to the Taxation Administration Act 1953 can make directors personally liable for specified unpaid company PAYG withholding, net GST and superannuation guarantee charge liabilities. The notice is a step before recovery from the director; it is not the event that first creates every liability. Becoming a director, resigning or selling shares does not automatically eliminate exposure.

How the 21 days operate

Under section 269-25, the Commissioner cannot commence recovery proceedings until the end of 21 days after giving the notice. The section treats a notice posted to the relevant address as given when posted. The remission provision in section 269-30 separately looks at actions before the notice or within 21 days after it is given. Postal delay does not add days.

Illustrative dates: if a notice is validly given by posting on 1 September 2026, the period of 21 days after that date ends on 22 September 2026. Do not start counting from delivery on, for example, 5 September. This illustration assumes valid giving on 1 September; have the actual notice, address, service evidence and applicable counting rules checked immediately.

1. 1 September — notice validly posted and given
2. 2 September — first day after giving
3. 22 September — end of the 21-day period

Lockdown and non-lockdown penalties

These practical labels describe whether non-payment actions can remit a penalty. Where reporting conditions are met, remission may be available if the company pays, enters administration or winding up, or appoints a small-business restructuring practitioner within the statutory time. A late appointment does not retrospectively satisfy the rule.

For PAYG withholding and net GST, reporting more than three months after the relevant due day can lock down the relevant amount. Paying the underlying liability can reduce the corresponding penalty; appointing an external administrator does not remit a locked-down amount. Different periods and reporting rules apply to superannuation guarantee charge. Check each debt component separately instead of labelling the entire notice from its headline amount.

Payday Super from 1 July 2026

The post-1 July 2026 SGC rules need their own analysis. For relevant qualifying-earnings days, section 269-10 defines the director-penalty due day by reference to the earlier of the first day after a 60-day period starting on that day and the statutory day when the charge is payable. Section 269-30 ties access to non-payment remission to voluntary disclosure on or before the applicable due day and the amount disclosed. This is not a 60-day grace period for making super contributions.

For older quarterly SGC liabilities, different reporting provisions apply. Collect payroll dates, fund receipt records, SGC statements, voluntary disclosures and ATO assessments. A notice can contain liabilities governed by different versions of the rules; the old shorthand about quarterly statements should not be applied to all new liabilities.

What to do immediately

1. Preserve the notice, envelope and ATO account records; establish when and how it was given.
2. Identify each liability, reporting date, payment and director appointment or resignation date.
3. Assess solvency and realistic funding, without promising money that is unavailable.
4. Obtain legal advice on validity, remission and any statutory defence, alongside urgent insolvency advice where needed.
5. Complete the chosen action in time and retain proof; do not rely on a discussion or proposed appointment.

A payment plan is not itself one of the non-payment remission actions. An objection about the underlying company tax does not automatically stop director-penalty recovery. Defences, including those concerning participation in management or reasonable steps, have specific conditions and evidence requirements.

Co-directors, loan accounts and a pending sale

One payment can reduce corresponding liabilities, while section 269-45 can give a paying director rights of indemnity and contribution. Recovery from the company or another director is a separate question of entitlement, solvency and evidence. Do not assume the ATO will divide recovery equally between directors.

Reconcile director loan accounts and guarantees before moving funds. A company’s accounting entry does not by itself discharge a director penalty. If a business sale is pending, examine the seller, completion proceeds, tax indemnities, disclosure and the feasibility of proposed payment. A buyer’s contractual promise is not a release by the ATO.

Which adviser is needed?

A lawyer assesses legal exposure and strategy; the accountant reconstructs lodgements and balances; a registered insolvency practitioner assesses and implements any appropriate formal appointment. Engage the combination needed for the actual deadline. Do not spend the available period debating a long-term restructure before addressing the notice.

Official sources

• Taxation Administration Act 1953 — Part IVC and Schedule 1 Division 269
• Treasury Laws Amendment (Payday Superannuation) Act 2025 — Schedule 1