ATO Debt and Director’s Penalty Notices

If your company owes the ATO a debt, a Director’s Penalty Notice (DPN) may be issued.

First: What is the debt?

Is the ATO debt a GWL Debt?  A GWL debt incorporate the following, a goods and services tax, wine equalisation tax or luxury car tax.

If it is a GWL debt and the debt has been incurred on or after April 1 2020?

If No: Then it is likely there is no risk of a PDN being incurred. Is the ATO debt superannuation or PAYG? If this isn’t, then it is also likely not a risk that DPN is issued.

However; If the GWL debt was incurred prior to 1 April 2020 or the debt was an ATO debt of superannuation/PAYG, then the following may be considered. Have there been any Business Activity Statements or tax return lodged for a period over 3 months from when they were due?

If: These statements were not lodged for a period greater than a 3 month period, there is a likely chance that the director will be liable for a ‘Lockdown DPN’ from the ATO.

Lockdown DPN: Notification that a director is completely liable for the Company’s ATO debt. With the resolution options being only to pay the debt, discuss resolution methods with the ATO or declare a form of personal bankruptcy.

If: The Statements were lodged for a period of 3 months or more, than they may still be likely for DPN but a non-lockdown DPN.

Non-Lockdown DPN: Means prior to the ATO issuing a written DPN. Options for this include: paying the debt or arranging for an external administrator. This can include a Liquidator or Voluntary administrator. This is required to be done within a period of 21 days from the issuing of the notice, note this is not the date the notice was received.