• Commercial Law

    Commercial Law

    We are business people as much as we are lawyers. We will take care of the legal documents so you can confidently run your business.
    As your business grows, its risk profile and governance challenges will change. We partner with our clients over the long term to ensure they are in the driver’s seat for success.

  • Dispute Resolution

    Dispute Resolution

    We are in your corner when the going gets tough. Having resolved over 6,500 disputes for business owners have seen it all before.

    Whether you need a skilled negotiator or a fearless litigator, we specialise in delivering commercial results when:

    Customers refuse to pay;
    Suppliers let you down; and
    Business Partners do the wrong thing.

  • Employment & Safety

    Employment & Safety

    The biggest challenge for any business owner, is managing their employees.

    A difficult employee can make you question why you got into business in the first place and be toxic to your team morale.

    We deliver proactive solutions to manage your team via employment contracts, policies and procedures as well as handling employment disputes when they arise.

  • Property & Construction

    Property & Construction

    Property is the key most wealth in Australia.  Whether you are buying, selling, leasing or developing property, you need a lawyer you can count on.

    We can advise on the whole property development process from obtaining finance to development approvals, construction and sale or leasing.

    We also act for the Master Builders Victoria and have extensive expertise in construction contracts and disputes.

  • Family Law

    Family Law

    At Taurus Legal Management we understand the unique challenges clients encounter during family disputes, especially when children are involved. Our family lawyers specialise in handling high-asset cases with a focus on protecting clients wealth, securing their family’s future, and safeguarding the best interests of their children.


Corporations are separate legal entities to their directors, meaning that the owners enjoy the benefit of not being liable for company debts. Whilst this is a major incentive to running a business through a corporate entity, there are exceptions.

The directors of a company are in charge of making sure that the company’s tax and superannuation requirements are reported and paid in a timely manner.

This includes payment of:

  • Pay as you go withholding;
  • Goods and services tax; and
  • Super guarantee charges.

If these are not paid on time, the ATO can salvage them from you personally as either a current or former director, using a Director Penalty Notice (DPN). If you receive a DPN, it is crucial that you respond appropriately and within the tight timeframes set by the ATO.

What is a Director Penalty Notice?

A DPN is a notice that allows the ATO to recover the company’s debts from the directors personally. The notice will list the type of payment which has not been made (for example, a failure to pay superannuation), the unpaid amounts and potential remission options available.

The notice also:

  1. Gives a director 21 days to comply, until the ATO can bring recovery proceedings against them; and
  2. In some situations, the director can remit their personal liability by taking certain action within the 21 days.

The 21-day timeframe commences on the date the DPN is posted. Any directors who receive a DPN should record the date appearing on the top of the DPN and the date it was received. If you don’t think you will be able to respond to the DPN within the 21-day timeframe, an extension should immediately be sought from the ATO. In rare circumstances, the ATO may grant you more time.

Ramping Up of Director Penalty Notices

Following the COVID19 pandemic, the ATO have significantly ramped up issuing DPN’s. We are finding that the ATO are taking this approach because:

  1. DPNs are no longer being manually processed. The ATO now have systems in place to automatically issue DPNs for certain types of debts. This means that logistically, the DPNs can be processed sooner and more efficiently; and
  2. Temporary legislation addressing the COVID19 pandemic and placing deferrals or stays on enforcement action have ceased.

Since July 2022, over 24,000 DPN’s have been issued to company directors, relating to over 18,000 companies in Australia.

According to the ATO, only one in three took action on their notices.

Importance of responding to a Director Penalty Notice

If you do not respond to a DPN within the 21-day timeframe, it will encourage the ATO to pursue enforcement action against you. This enforcement action could include bankruptcy and/or seizing and selling assets, including your family home.

It’s important to get legal advice and if appropriate, speak to an insolvency practitioner before responding or acting on the DPN.

Types of Director Penalties

There are two types of director penalties; non-lockdown and lockdown.


A non-lockdown director penalty is issued when debs are unpaid, and the company has reported the debt to the ATO. This includes:

  1. Within 3 months of the due date for PAYG withholding and GST; and
  2. 1 month and 28 days after the end of the relevant quarter for Superannuation.

A non-lockdown DPN gives a director 21 days from the notice date to attend to either paying the debt, or appointing a voluntary administrator, small business restructuring practitioner or liquidator. A common response is to gain advice and place the business into voluntary administration. Often this can be the path of least resistance and avoid personal liability.

If none of the above are attended to, the director penalty locks down the director and the ATO can go ahead and issue proceedings against the director.


A lockdown director penalty refers to debs which are unpaid, and the company has not reported the debt to the ATO within the relevant timeframes.

This means that the director is permanently locked down, and the only way to get out of the penalty is to pay the debt in full. If the debt needs to be paid in full, it’s a good idea to:

  1. Speak to the other directors of the business and see if you can share the debt amongst yourselves;
  2. Get individual advice from your lawyer, accountant and financial advisor. It’s important to assess your own financial position and what payments you can commit to; and
  3. Negotiate a payment plan with the ATO.

Contact Us

If you have received a Director Penalty Notice, contact our experienced team immediately on (03) 9481 2000 or info@tauruslawyers.com.au for a review of your position and advice on your options, to avoid proceedings being taken against you.

Posted by Taurus Legal Management