Calling all Directors: What you need to know about Director Penalty Notices (DPNs)
This one is for all company Directors – we have an important update! The Australian Tax Office (ATO) have been cracking down on company debt and issuing Director Penalty Notices (DPNs) in an attempt to recover outstanding company liabilities. Keep reading to find out everything you need to know about DPNs and how this crack down affects you and your business:
What is a DPN?
As a Director, you are responsible for ensuring your company meets its tax & superannuation obligations. If your company has certain types of unpaid liabilities, the Australia Tax Office (ATO) can issue a penalty known as a Director Penalty Notice (DPN).
The ATO can use a DPN to recover unpaid amounts of:
- Pay As You Go Withholding Tax (PAYG)
- Goods and Services Tax (GST)
- Superannuation and Super Guarantee Charge (SGC)
Receiving a DPN confirms that a penalty has been imposed on the Director personally with an amount equating to unpaid taxes and superannuation.
How serious are DPNs?
Receiving a DPN is a serious matter, and once issued, you have limited time to respond and take action to avoid further liabilities.
Once you receive a DPN from the ATO, Directors have 21 days to either:
- Pay the corresponding penalty amounts in full, or
- Engage with the ATO and negotiate a payment plan for the company debt
If neither of the above happens, the ATO may take further action to recover the Director penalty amounts. This means the ATO can pursue you personally and your personal assets are at risk.
When issuing a DPN, the ATO will use the registered address with the Australian Securities & Investment Commission (ASIC) or the last known address to the ATO, so keeping these details up to date with your Accountant (that’s us!) is very important to ensure notices are received.
With a DPN crackdown on the horizon, this is a reminder to all Directors to remain hyperaware of your company’s financial situation. Understanding and meeting your obligations early will help ensure you avoid becoming personally liable to the ATO.
Have more questions? Call or click to discuss with a Macro Group team member.
The Macro Group Team
Date: 12/11/2024
The Macro Group Limited AFSL:485843 Tax Agent Number 24 76 5236.
The information in this article contains general information only. We have not taken into consideration any of your personal objectives, financial situation or needs. Before taking any action, you should consider whether the general advice contained in this communication is appropriate to you having regard to your circumstances and needs, and seek appropriate professional advice if you think you need it. We recommend that you consult a licensed or authorised financial adviser if you require financial advice that takes into account your personal circumstances.