The worst thing you will ever want to receive from the Tax Department is a DPN. And the reason is, you have a limited amount of time to do something before you, as a director, become personally liable for the debts of the company.
What is a Director’s Penalty Notice (DPN)?
A DPN is a notice from the ATO which mandates you to take a course of action: pay your debts to the ATO, come up with an agreement, or put the company into liquidation.
If you pay the ATO or put the company into liquidation, generally you are absolved of any further future responsibility to the ATO.
Well, that’s how it used to be… until July 2012.
In July 2012 the ATO created a system whereby if you didn’t lodge your activity statements within three months they would make you personally liable for the super and for the taxes for the staff.
Even though you put the company into liquidation, you as the director become personally liable. The first thing you need to do before you get to that stage, is make sure you lodge your BAS and activity statements on time, all within 3 months.
What can you do about it?
If you lodge them within that time period and even if your company goes bust, you will be protected. If you don’t lodge, you’ll become personally liable.
The second thing you need to do is as soon as you get that notice you must contact your accountant, lawyer or business advisor.
The third thing to understand is they will send that notice to the registered office that they have. If you moved house or offices and it went to the previous place, that’s no excuse. You have a limited amount of time, within 21-28 days to deal with this.
If you don’t deal with this you will be personally liable for all debts.