Lockdown vs Standard Director Penalty Notice: What Each Means for Your Finance

Key takeaways

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  Lockdown is the name for amounts on a director penalty notice that your company did not report to the Australian Taxation Office (ATO) in time, or never reported. It applies amount by amount, so one notice can hold both locked and unlocked amounts.
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  Pay as you go withholding or goods and services tax reported more than 3 months after its due date, or never reported, is locked: your personal penalty for it is remitted, meaning you no longer owe it, only if your company pays it in full.
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  Amounts the ATO has estimated on a director penalty notice are treated as never reported, so they are locked from the start and are remitted only if your company pays them in full.
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  Appointing an administrator or a small business restructuring practitioner, or winding up your company, remits only the amounts on a director penalty notice that were reported in time. The locked amounts stay with each director personally.
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  Since 1 July 2026, under the director penalty rules, unpaid super guarantee charge has its own due day for each payday, so a company that has missed several paydays can have several due days.
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  A private loan from Secured Lending, from $250,000 and backed by property, gives your company the funds to pay the locked amounts on a director penalty notice, or its whole ATO balance, within the 21 days.

A standard director penalty notice leaves four ways to have your personal penalty remitted within 21 days. Lockdown is the name given to amounts on the notice that your company reported to the ATO late or never reported, and for those amounts only one way remains: your company pays them in full. That payment can still be made within the 21 days.

If your company does not have the cash, we would be glad to help. When you or your company own property, a short-term private loan backed by that property is a good fit for this problem, because it can be in place inside the 21 days. We lend our own funds, we decide in hours and can settle within 24 hours, and we can still lend after a director penalty notice has arrived. We lend from $250,000. The loan funds are paid to your company, which pays the locked amounts, or its whole ATO balance, before the 21 days end, and your company then repays us through a defined exit, such as a refinance or the sale of a property.

Lockdown applies to each amount, not to the whole notice

Lockdown is not a term the director penalty legislation uses. It does not appear in Division 269 of the Taxation Administration Act 1953, which sets the director penalty rules, or on the ATO's director penalties page. It is a label used outside the ATO. In Lee v Deputy Commissioner of Taxation [2020] NSWCA 95, for example, the New South Wales Court of Appeal refers to section 269-30(2) of Schedule 1 to the Act as the lockdown provision. The ATO describes the same rule by when each amount was reported.

Because the rule is applied amount by amount, one notice can hold both kinds. Section 269-25(3) of Schedule 1 states it directly: "To avoid doubt, a single notice may relate to 2 or more penalties, but must comply with subsection (2) in relation to each of them." Subsection (2) requires the notice to explain the main circumstances in which each penalty will be remitted.

The figure that sets the size of the payment, then, is how much of the notice is locked, rather than whether the notice as a whole is lockdown. If you want the basics first, our guide to how a director penalty notice and its 21 days work covers what the notice is and how the days are counted.

The test for each kind of amount

For amounts reported in time, the ATO lists four ways the penalty can be remitted within the 21 days: the company pays the amount in full, an administrator is appointed, a small business restructuring practitioner is appointed, or the company begins to be wound up. For a locked amount, only the first remains. In the ATO's words, for pay as you go withholding or goods and services tax reported late, the penalty "can only be remitted by paying the corresponding company liability in full".

If you became a director during or after those 3 months, section 269-30(3) of the Act counts the 3 months for pay as you go withholding and goods and services tax from the day you were appointed.

Two details in the Act matter when you add up the locked amounts.

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  Part of an amount can be locked. The protection in section 269-30(2) covers only what the company reported within the 3 months. For goods and services tax, if the net amount worked out from the business activity statement the company lodged within the 3 months is less than the amount the ATO later assesses, the difference can only be remitted by payment.
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  Lodging the overdue BAS now does not change the result for amounts already past 3 months. The test is whether the amount was reported within 3 months of its due date. Whether lodging now can reduce an ATO estimate is a question for your accountant.

One notice, two kinds of amount: the ATO's own example

The ATO's director penalties page works through a case with both kinds on one notice. A company reported $4,000 of pay as you go withholding within 3 months of its due date but did not pay it, and it reported $0 in goods and services tax. The ATO later estimated $10,000 of unpaid goods and services tax, and issued director penalty notices to the two directors, Taylor and Cam, covering both amounts.

Taylor and Cam chose to wind up the company within 21 days of being given the notices. Winding up remitted the $4,000 penalty for the pay as you go withholding, because it had been reported in time. It did nothing for the $10,000 of estimated goods and services tax, which the ATO confirms could only be remitted if the company paid the debt. Each director remained personally liable for that $10,000. It was the locked total on their notices.

To work out your own locked total, ask your accountant or BAS agent to list, for every amount on the notice:

1. •
   The tax type and the period it relates to.
2. •
   Its due date.
3. •
   The date the company reported it, or whether the amount is an ATO estimate.
4. •
   Whether it was reported in time under the test above.

Add up the amounts that were not reported in time. That figure is the least the company has to pay within the 21 days for you to have those penalties remitted. Which amounts are locked is your accountant's call from the lodgement records. We are a lender, and we do not give tax advice.

What each route does to the locked amounts

If the company pays in full, every amount on the notice is remitted, locked or not. If an administrator or a small business restructuring practitioner is appointed, or the company begins to be wound up, only the amounts reported in time are remitted. Section 269-30(2) of the Act sets out the cases where those appointments, or a winding up, do not affect the penalty, and in those cases the locked amounts remain with each director personally.

A payment by the company reduces the company's debt and every director's penalty by the same amount (section 269-40). Where there are two or three directors, the locked total is paid once, not once for each of them.

Which route suits the company is a question for your accountant or an insolvency practitioner, and whether a defence applies to you is a question for your solicitor.

Paying the locked amounts with a private loan

The company can borrow enough to pay the locked total, or enough to pay its whole ATO balance. Paying the whole balance remits every amount on the notice. If the company pays only the locked total, the amounts reported in time can still be remitted by any of the four routes within the same 21 days. Settle which figure to fund with your accountant before you apply, because it sets the loan amount.

The company is the borrower, and at settlement the loan funds are paid to the company. The company then pays the ATO itself.

The property can be your home, an investment property or the company's commercial or industrial property, and a second property can be added as additional security within the same 70% maximum loan-to-value ratio. Our tax debt loans page sets out how the product works across all ATO debts.

A loan adds a new debt for the company. A payment to a creditor, including the ATO, made while the company is insolvent can in some cases be recovered by a liquidator as an unfair preference. If you are unsure whether the company can pay its debts as they fall due, speak to an insolvency practitioner before the company borrows.

Payday Super: each payday has its own due day

Since 1 July 2026, the due day for super guarantee charge under the director penalty rules is set for each payday. Under section 269-10(3) of the Act, the charge for a qualifying earnings day, which the ATO describes as payday, is treated as payable on the earlier of two days: the first day after the 60-day period that starts on that payday, or the day the charge itself is payable. Where the ATO assesses the charge, it is payable on the day the assessment is made.

A company that has missed several paydays can therefore have several due days, one for each missed payday, rather than one quarterly date. Each super amount becomes locked on its own due day. Under section 269-30(2), a voluntary disclosure statement lodged for that payday on or before its due day keeps the disclosed amount out of lockdown, and how and when to lodge one is a question for your accountant. If paydays are still being missed, our Payday Super loans can give the company the funds to pay the shortfall before more amounts pass their due day.

Frequently asked questions

Can you lend to pay a lockdown director penalty notice?

Yes. A locked amount is remitted when the company pays it in full, and we lend the company the funds to make that payment, from $250,000, on the terms in the table above.

Is my notice lockdown or standard?

Each amount on the notice is assessed on its own, so one notice can contain both kinds. The test is whether each amount was reported in time: within 3 months of its due date for pay as you go withholding and goods and services tax, or by the super guarantee charge due date for super guarantee charge. ATO estimates are treated as never reported.

Will administration remove a lockdown penalty?

It does not remit the amounts that were reported late or estimated. Appointing an administrator or a small business restructuring practitioner, or winding up the company, remits only the amounts reported in time. Whether either process suits the company is a question for an insolvency practitioner.

If the company lodges the overdue BAS now, does that unlock the amount?

It does not, for amounts already more than 3 months past their due date. The test is whether the amount was reported within 3 months of its due date, so a later lodgement leaves payment in full as the only route for that amount.

Does a payment plan stop a lockdown director penalty notice?

A payment plan stops the ATO taking court action while it is in force, but it does not remit the penalty. Section 269-15(3) of the Act stops proceedings while an instalment arrangement covering the company's debt is in force, and a note to that section confirms the ATO can still give a director a penalty notice. A payment plan is not one of the ways a locked amount is remitted.

Does the ATO's interest change how much the company needs to borrow?

It does, because general interest charge keeps accruing on the company's unpaid balance until the ATO receives the payment. The ATO's general interest charge rate for October to December 2026 is 11.51% a year. Size the loan from the company's ATO statement of account for the day it expects to pay, not from the figure printed on the notice.

How Secured Lending Can Help

We would be glad to help you have the locked amounts remitted within the 21 days. Lockdown leaves payment in full as the one way to do that, and our loan gives your company the funds to make that payment, or to clear its whole ATO balance. Your company then repays us through a defined exit, such as a refinance or the sale of a property.

A private loan suits this problem because it can be in place inside the 21 days. We decide in hours, issue a letter of offer as soon as terms are agreed, and can settle within 24 hours. We lend our own funds and our in-house team values the property, so there is no wait for an outside valuer. We can still lend after a director penalty notice has arrived, and a live ATO tax debt listing is not, on its own, a reason we decline.

We provide secured loans backed by real property. If you would like us to look at your situation, it helps to have these to hand:

1. •
   Your accountant's list of each amount on the notice, with its due date and the date it was reported.
2. •
   The director penalty notice, showing the date the ATO posted it.
3. •
   Your company's ATO statement of account.
4. •
   The property that could back the loan, its estimated value and any loan already on it.
5. •
   How your company plans to repay the loan, and roughly when.

Our page on funding a director penalty notice within the 21 days sets out each step from the first call to your company's payment to the ATO. You are welcome to call us on 1300 795 175 to talk it through, or send the details through and we will come back to you. In most cases, we can tell you within hours whether we can help.

Gino Tabila

Associate Director

Mark Hutchins

Managing Director