A director of a company that has a tax debt to the ATO (often in relation to PAYG withholding amounts) may be served with a Director Penalty Notice also known as a “DPN”. The aim of a Director Penalty Notice or DPN is to make directors liable for their company’s unpaid tax debt. Director Penalty Notices have undergone some very significant changes.
The ATO used to allow the company 14 days to remit the penalty before they commenced recovery proceedings. This has now increased to a 21 day period which is not negotiable and starts from the date the notice was posted, rather than the date it was received by the recipient. The court also has no power to grant relief to a director from their obligations in respect to a Director Penalty Notice.
Within 21 days of service of a director penalty notice, the director must ensure the company:
• pays the amount outstanding,or
• comes under voluntary administration, or
• has a liquidator appointed.
The Director Penalty Notice clearly states the dollar amount of the tax debt owed by the director’s company. If you are a director it is important to be aware that if you receive a Director Penalty Notice and do not undertake one of the three options within the 21 days allocated, you can become personally liable for the tax debt of the company. What this essentially means is that the ATO can then commence action against you rather than the company to collect the outstanding debt.
If your business has a tax debt or you have received a Director Penalty Notice it is vital that you seek professional advice and quickly! There can be significant ramifications for not complying with the ATO’s notice, this can include losing personal assets such as cars, property or shares. Here at The Quinn Group our team of tax lawyers and accountants are experienced in dealing with the ATO and tax debt issues. For more information on the changes to Director Penalty Notices or about other tax debts submit an online enquiry. Alternatively, call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166.
