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Home›Services›What Is A Director Penalty Notice?

What Is A Director Penalty Notice?

By Chris
October 2, 2020
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A Director Penalty Notice (DPN) is issued by the Australian Taxation Office (ATO) to a director of company when it fails to meet its taxation and superannuation guarantee obligations. Recent changes now make it possible for the director to be personally liable for any monies owed by a company.

It allows the ATO to go beyond a company’s corporate structure to hold directors liable for money owed to the ATO and entitlements of the employees of the company. This was specified in the 2019 Treasury Laws Amendment (Combatting Illegal Pheonixing) Bill which also announced that DPNs would be used for unpaid or unreported GST liabilities as well.

The intention of the bill is to prevent unscrupulous directors of companies from liquidating a company (and hence its liabilities) and then establishing another company that is essentially the same as the first but with no liabilities – essentially a means of avoiding paying tax and other obligations.

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