Key takeaways
- •The Australian Taxation Office (ATO) sends a director penalty notice before it can recover a company's unpaid pay as you go withholding, goods and services tax or super guarantee charge from a director personally. The notice's 21 days start on the day the ATO posts it, not the day you open it.
- •A statutory demand from the ATO gives your company 21 days from when it is served to pay the entire debt or enter a payment plan. If you also hold a director penalty notice, work to whichever deadline ends first.
- •A payment can take up to 4 business days to appear on your ATO account, so plan for the ATO to have your business's payment by day 21, not just to send it on day 21.
- •The ATO can add general interest charge to an unpaid balance every day, so borrow enough to cover the full ATO balance on the day the payment is expected to be credited, not the amount printed on the notice.
- •A private loan from Secured Lending, from $250,000 and backed by property, gives your business the funds to pay the ATO inside the 21 days, and we can still lend after a director penalty notice or a statutory demand has arrived.
- •Secured Lending decides in hours, issues a letter of offer as soon as terms are agreed, and can settle within 24 hours. That leaves time within the 21 days for your business's payment to reach the ATO account.
Yes. A private loan backed by property can be decided and settled, and your business can pay the ATO from the loan funds, inside 21 days. Days are lost at the two ends of the 21 days: the days the notice spent in the post before you opened it, and the days the ATO takes to show a payment on its account.
If a notice has arrived, we would be glad to help you fit the loan inside those 21 days. A private loan backed by property suits this problem because it is fast: we lend our own funds, so there is no outside funder to wait on, and our in-house team values the property, so there is no wait for an external valuer. We decide in hours, issue a letter of offer as soon as terms are agreed and can settle within 24 hours, and we can still lend after a director penalty notice or a statutory demand has arrived. That leaves most of the 21 days to cover the post at the start and the ATO's processing time at the end. The loan funds are paid to your business, which pays the ATO itself, and your business then repays us through a defined exit, such as a refinance or the sale of a property.
The two notices in brief
A director penalty notice is the notice the ATO must give a director before it can recover the company's unpaid pay as you go withholding, goods and services tax or super guarantee charge from them personally. Under the ATO's director penalty rules, it can recover the penalty from you 21 days after it issues the notice. Our page on what a director penalty notice means and how it is remitted covers the ways the penalty can be remitted.
A statutory demand is served on the company. As the ATO explains in its guide to the legal action it may take, a demand requires the company to pay the entire debt, or enter into a payment plan with the ATO, within 21 days. A company can also apply to set the demand aside within the same period, and our page on the two 21-day deadlines on a statutory demand explains how paying the demand and applying to set it aside share those days.
When each 21 days starts
The 21 days on a director penalty notice do not start when you open the envelope. On the ATO's director penalty page, the rule reads: "The 21 days starts on the day we post the DPN or leave the DPN at the address registered with ASIC." If the notice sat in a letterbox or went to an old address, some of those days have already gone.
A statutory demand runs from service on the company. Under section 459E(2)(c) of the Corporations Act, the demand must require the company to pay, secure or compound for the debt within the statutory period after the demand is served on it, and section 9 sets that statutory period at 21 days unless a longer period is prescribed.
If you hold a director penalty notice and the company has also been served with a statutory demand, you have two deadlines with two different start days. Work to whichever ends first.
The exact last day depends on rules about whether the first day counts, what happens when day 21 is a weekend or public holiday, and when a posted document is treated as served. Your solicitor counts those days and can give you the date in writing. We are a lender, and we do not give legal advice.
Allow for the ATO's processing time at the end
The loan funds are paid to the business, and the business then pays the ATO. Paying on day 21 is not the same as the ATO having the money on day 21. The ATO's guide to payment options puts the processing time in one sentence: "Payments can take up to 4 business days to be received by us and appear on your ATO account."
Up to 4 business days is 6 calendar days when a weekend falls in between. A payment made on a Thursday may not show on the ATO account until the following Wednesday, and a public holiday adds another day. The target, then, is the date the ATO account shows the business's payment, which means the loan needs to settle several business days before the last day.
Three practical points apply when the business makes the payment:
- •Method. The ATO names BPAY and its online services as the quickest ways to pay. A new direct debit takes at least 7 working days to activate, on top of the processing time, so it is the slower choice inside a 21-day window.
- •Reference. Different types of tax have different payment reference numbers, for example one for income tax and one for activity statements. The ATO's page on payment details warns that an incorrect payment reference number can delay the payment being credited and lead to unnecessary debt collection activity.
- •Cards. After 30 November 2026 the ATO no longer accepts credit cards, which our article on the ATO stopping credit card payments after 30 November 2026 explains.
A step-by-step timeline inside the 21 days
Each step, from the day you send us the notice to the day the ATO account shows the business's payment:
| Step | What happens | How long it takes |
|---|---|---|
| You send us the deal | You send the documents listed at the end of this article | In most cases we advise whether we are proceeding within hours of receiving it |
| Terms agreed | You agree the loan amount, term and interest rate | The letter of offer is issued immediately |
| Settlement | The loan funds are paid to the business | Within 24 hours, and the same day in qualifying scenarios |
| The business pays the ATO | The business pays its ATO account balance from the loan funds, by BPAY or online services, using its correct payment reference number | Up to 4 business days to appear on the ATO account |
| Buffer | Nothing | The days left before the earlier of your two deadlines |
The first step is the only one that waits on you, and the documents it needs are ones you or your accountant already hold. Each day it waits is one day less of buffer before the deadline. After that, our in-house valuation team values the property, so there is no wait for an external valuer, and we lend our own funds, so there is no outside funder to wait on between the letter of offer and settlement.
The business is always the borrower, even where the property backing the loan belongs to a director, and the business repays the loan to us. The loan works like this:
| Loan feature | Detail |
|---|---|
| Loan size | From $250,000, with larger loans assessed case by case |
| Interest rate | From 9.7% p.a. on our tax debt loans, from 11.95% p.a. on a second mortgage |
| Term | 1 to 24 months, typically 3 to 6 months |
| Security | A first or second mortgage over residential, commercial or industrial property owned by the business or by you as a director or owner, including property already held in a company or a trust |
| Maximum loan-to-value ratio | 70%. For a second mortgage, the first and second mortgages combined. A second property can be added as additional security within the same 70% |
| Repayment | The business repays the loan through a defined exit strategy, for example a refinance or the sale of a property |
Our page on how our ATO tax debt loans are structured sets out the product in more detail.
How much to borrow when interest keeps adding to the balance
The amount on the notice may not be the amount the ATO account shows on the day your payment is credited. The ATO may apply the general interest charge where an amount of tax stays unpaid after the date it should have been paid, and it calculates the general interest charge daily, compounding on the amount overdue. For October to December 2026 the general interest charge rate is 11.51% a year, a daily rate of 0.03153425%, and the ATO updates the rate every quarter.
At that daily rate, the general interest charge on a $500,000 balance for 10 days is about $1,579, assuming the rate does not change, and the figure on your ATO account may differ. The loan is therefore sized to the full ATO balance on the date the payment is expected to be credited, worked out with your accountant from the ATO account summary, rather than to the figure printed on the notice.
What changes on day 22
For a director penalty notice. If the penalty has not been remitted within the 21 days, the ATO may take action against you to recover it, by offsetting your tax refunds or credits against it, by firmer action or by legal action. Where pay as you go withholding or goods and services tax was reported more than 3 months after its due date, or was still unreported after 3 months, the ATO lists paying the company's liability in full as the only way to remit the penalty. A payment still has an effect after day 21: under the ATO's parallel liability rule, a payment towards either the company's debt or your penalty reduces both by the same amount. Whether a payment after day 21 still remits your penalty is a question for your accountant.
For a statutory demand. Unless the company has applied to set the demand aside, the period for compliance is the 21 days (s 459F(2) of the Corporations Act), and at the end of that period the company is taken to have failed to comply (s 459F(1)). If a wind-up application is then made within 3 months, section 459C(2) requires the court to presume that the company is insolvent, and the ATO states that it may use the non-payment as evidence of insolvency and apply to the Federal Court to wind the company up. An application to set the demand aside can only be made within the same 21 days (s 459G(2)), so that option also closes at the end of the period.
Whether to dispute the debt, which remission route applies and whether the company is solvent are questions for your solicitor, accountant or an insolvency practitioner. If a company is later wound up, the Corporations Act can make a payment to one creditor voidable as an unfair preference, so a director unsure of the company's solvency should speak to their accountant or an insolvency practitioner before the company borrows to pay the ATO.
Frequently asked questions
If I pay on day 21, does it count?
Plan for the ATO to have the business's payment by day 21, not just for the money to leave the business's bank account. A payment can take up to 4 business days to be received and appear on the ATO account. Your accountant can confirm how the payment date is treated for your notice.
I have a director penalty notice and the company has a statutory demand. Which date do I work to?
Work to whichever date comes first. The director penalty notice's 21 days start on the day the ATO posts it, and the demand's 21 days start when it is served on the company, so the two deadlines often fall on different days. A payment towards the company's debt reduces the director penalty by the same amount, but whether one payment answers both notices depends on the debts each covers, which your accountant can check. Your solicitor confirms both last days.
How much should I borrow if interest keeps adding to the ATO balance?
Borrow to the full ATO balance on the day you expect the payment to be credited, not to the amount on the notice. The general interest charge can keep adding to the balance each day it stays unpaid, and your accountant can work out the figure from the ATO account summary.
What happens if the money reaches the ATO on day 22?
For a director penalty notice, the ATO may start recovering the penalty from you personally, although any payment still reduces the company's liability and yours equally. For a statutory demand, unless the company has applied to set the demand aside, the company is taken to have failed to comply, and a court must presume it is insolvent on a wind-up application made within 3 months. This is why the loan should settle several business days before day 21.
How Secured Lending Can Help
We would be glad to help your business pay its ATO balance inside the 21 days, with time left for the payment to reach the ATO account. Our loan gives your business the funds to make that payment, and your business then repays us through a defined exit, such as a refinance or the sale of a property.
A private loan suits a 21-day deadline because it is quick. 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 or a statutory demand 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:
- •The director penalty notice or statutory demand, with the date shown on it.
- •Your company's ATO account summary, which your accountant or business activity statement agent can view in ATO online services.
- •The property address, its estimated value, and the balance and lender of any existing loan on it.
- •How your business plans to repay the loan, and roughly when, for example from a refinance or the sale of a property.
The day the notice arrives is the day that leaves the most room in the timeline. 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 are proceeding.
