Director Penalty Notices (DPNs) are just one of the broad range of powers available to the Australian Taxation Office to pursue delinquent debtors. Another power is garnishee notices which we have written about before.
Generally speaking there are two types of DPNs which the ATO can issue to company directors to make them personally liable for a company’s superannuation and PAYG debts:
- “Lockdown” DPNs which can be issued where a company has not lodged its Superannuation Guarantee Charge Statements and/or Business Activity Statements within three months after it was due (i.e. if the BAS due date is 28 October 2018 you need to have it lodged by at least 28 Jan 2019). Outside of paying the debt in full, a director essentially has no options to avoid personal liability for a “lockdown” DPN.
- “Ordinary” DPNs which can be issued where a company has lodged its BAS and SGC Statements with the ATO within three months after it was due.
To remove the risk of receiving a “lockdown” DPN you should therefore ensure you are lodging your BAS within three months after they are due at the absolute least. This will mean that any DPN you receive will be an ordinary DPN which gives you 21 days to liquidate or place your company into administration to avoid personal liability.
Ideally of course you should be lodging your BAS by the due date. However, we understand that due to cash flow constraints sometimes you simply can’t pay your ATO debt and therefore would rather push back lodgement of the BAS. An alternative to this is to lodge your BAS on time and then negotiate a payment plan with the ATO to pay your debt in instalments. This will prevent the ATO taking recovery action against you (should you comply with the payment plan of course).
If you have received an ordinary DPN it’s important that you act quickly to avoid any personal liability so get in touch on 1300 4 CACTUS or send us an email at email@example.com.