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ATO Now Issuing "Director Penalty Warning" Letters

Apr 1, 2022 | Written by Brad Vincent

Over the last couple of days our phones have been lighting up with people who have received Director Penalty warning letters from the ATO. These appear to have gone out in bulk to COVID affected businesses. The letters warn of possible personal liability if company directors don’t take action.

What is a Director Penalty Notice?

A Director Penalty Notice (DPN) is a letter the ATO sends to the directors of a company telling them they are about to become personally liable for parts of their company’s tax debt. The ATO can pursue the directors for unpaid PAYG, Superannuation Guarantee and GST debt in some circumstances.

For in-depth information on DPNs see our page Director Penalty Notice Guide.

Proper Reporting

If you have received one of these warning letters, your first, and most important, question to consider is: Were the debts properly reported? That is, did the company lodge it’s BAS statement (for PAYG or GST, or Superannuation Guarantee Charge Statement within 3 months of the due reporting date. If the answer is yes, you have options.

What Are My Options?

If your debt was properly reported, you can head off the DPN by putting your company into:

Liquidation – For companies that no longer trade, or need to close.

Small Business Restructuring – For companies with total debt under $1 million, that want to continue by forming a deal with creditors. This option allows directors to stay in control of the company.

Voluntary Administration – For companies with total debt over $1 million, that want to continue by forming a deal with creditors.

Call for Confidential, Free Advice

For tailored advice on your options please give us a call.

Brad Vincent

Brad Vincent

Brad has been providing advice to directors of companies in financial distress for 10 years. After 10 years of being an advisor, Brad has developed an excellent understanding of the legal and practical issues facing a director of an insolvent company – it is rare for a director to throw a new situation at Brad. You will find him understanding and sympathetic, but above all practical. Brad will provide the cool head in a stressful situation.