Director Penalty Notice (DPN)

Put simply, a DPN is a notice from the ATO making director(s) personally liable for company tax and super. A true piercing of the corporate veil. DPNs are issued by the ATO when companies fail to report and pay tax or super obligations; significant unpaid debts are involved; and/or there is suspicion of phoenix activity.

Recent online articles in the accounting space have indicated the ATO has potentially issued as many as 50,000 DPNs to company directors in the last week alone. This is the first indication in pandemic times directors face the real risk of full ATO enforcement action if no measures are taken on outstanding company tax and super obligations.

Legislative changes to the DPN regime have substantially broadened the ambit of tax liabilities the Commissioner is able to recover under this action. Upon introduction, DPNs were put in place as a safeguard mechanism for employees to ensure their PAYG and compulsory superannuation obligations were not compromised by insolvent companies or phoenix activity.

Due to the new changes, ATO officers are now able to add GST, FBT, LCT and WET to the tax debts directors are now potentially personally liable for. Other recent changes include the removal of a payment plan option, which means company directors are liable for company tax debts immediately once the DPN is issued.

If you, or one of your fellow directors have recently been issued a DPN by the ATO, its important you know your rights and obligations because this is a personal liability. Contact us to seek advice and/or engage legal representation.