Director's Penalty Notices – A Concise Explanation
KEY ISSUE
DPNs issued by the ATO (Australian Taxation Office) are serious documents and can impose full personal liability to each director for unpaid amounts incurred by a company. If you have received a DPN, contact Bruce to discuss immediately commencing an insolvency administration of your company.
EXPLANATION
There are two types of DPN's:
DPNs giving 21 days to respond
Where companies have reported superannuation and taxes within the times allowed, but have not paid the amounts, the ATO may issue and send to each director what are known as “Non Lockdown DPNs“.
Non-Lockdown DPNs allow 21 days to respond:
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If the amounts claimed in the DPN are not paid or an insolvency administration has not been commenced for the company (as stated in the form) by the deadline, then the director becomes personally liable.
Lockdown DPN's
Where company unpaid superannuation or taxes have not been reported on time (superannuation) or shortly after the due dates (taxes including GST & PAYGW), then the Lockdown DPN is a demand for amounts that directors have already become personally liable.
A penalty applies to all directors equal to the amounts unpaid.
The tax office may estimate the amounts owed.
URGENT ACTIONS
Non-Lockdown DPNs
If payment cannot be made by the deadline stated in the DPN Form, then personal liability can only be avoided by appointing an insolvency practitioner to the company by the deadline as stated in the form. Contact Bruce to discuss immediately commencing an insolvency administration.
FURTHER DETAILS
Details of the actual deadlines for reporting and of insolvency administrations can be obtained from Bruce.