Directors Penalty Notice

Mark Hutchins

Mark Hutchins

Director - Secured Lending

Understanding a Directors Penalty Notice: What You Need to Know

A Directors Penalty Notice (DPN) is a legal notice issued by the Australian Taxation Office (ATO) to hold directors personally liable for the payment of certain outstanding tax debts owed by their company. This notice is designed to recover tax debts from companies that are in financial distress and to ensure that directors take responsibility for their company’s financial obligations.

DPNs are issued when a company has failed to pay Pay-As-You-Go (PAYG) withholding tax, Goods and Services Tax (GST), or Superannuation Guarantee Charge (SGC) amounts that are required to be withheld from employee salaries and wages. The notice requires the director to pay the debt personally within 21 days of the notice being issued. If the debt remains unpaid, the ATO can take further enforcement action, including garnishing wages, seizing assets, and even disqualifying the director from managing a company.

The ATO can issue a Directors Penalty Notice to any director who was in office when the debt was incurred, even if the director has since resigned. The notice can also be issued to any director who was in office at the time the debt became payable, even if they were not in office when the debt was incurred. This means that directors who are unaware of their company’s tax obligations and have not taken steps to manage these obligations may still be held personally responsible for the payment of outstanding debts.

In cases where a company has received a Directors Penalty Notice and is unable to pay the outstanding debt within the 21-day timeframe, short-term finance can be a solution. Short-term finance can provide quick access to funds and can be repaid within a short period of time without penalty. This type of finance can be a valuable tool for companies facing a DPN with short term financial constraints or liquidity issues.

In conclusion, a Director Penalty Notice is a powerful tool used by the ATO to recover tax debts from companies that are in financial distress. Short-term finance can be a valuable solution for directors facing a Director Penalty Notice. With quick access to funds, flexibility, and no security requirements, short-term finance can help you manage risk, improve cash flow, and avoid legal action. Directors should also take steps to address the underlying financial problems that led to the Directors Penaty Notice in the first place. If necessary, professional advice should be sought to ensure that the best course of action is taken.

How can Secured Lending help when a business has outstanding tax

We understand the complexities of tax debt for businesses and the potential benefits of short-term loans. Our experienced team is here to guide you through the process  and helping you explore suitable financing options to address your tax debt effectively. 

If you have been issued with a Directors Penalty Notice, check out our products to see if we can help, or alternatively, contact Secured Lending at 1300 795 175 or email info@securedlending.com.au

Keen to know more, check out how we have helped clients deal with Tax Debt.

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