The ATO Isn’t Waiting Anymore.
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For a few years there, many small business owners managed their ATO debt with a payment plan, a phone call, and the occasional ignored letter. That window is largely closed, but for directors who act early, options remain.
The Numbers Tell the Story
In the 2024–25 financial year, the ATO issued more than 84,000 Director Penalty Notices, a 136% increase on the prior year. Those figures come from the Inspector-General of Taxation, who announced a formal review of DPN use after the surge drew attention. The ATO issued roughly three times as many DPNs in a single year as it did the year before.
What a DPN Means for You Personally
A Director Penalty Notice (DPN) transfers your company’s unpaid PAYG withholding, GST, or superannuation directly onto you as an individual. Personal assets, including savings and property can be at risk once a DPN is received. Which is why understanding your position before one arrives matters so much.
There are two types. A non-lockdown DPN gives you 21 days to act:
- Pay the debt,
- appoint a voluntary administrator,
- commence a Small Business Restructure,
- or wind the company up.
A lockdown DPN is issued when the company failed to lodge on time and is more serious: it leaves payment as the only option to extinguish personal liability. For a full breakdown of both types and the steps to take, see our DPN 21-day action guide.
One thing directors often miss: the 21 days runs from the date the ATO posts the notice, not the date you receive it. If your registered address with ASIC is out of date, you may have far less time than you think.
If you’ve received a DPN or are concerned one may be on the way, the most important step is to get advice quickly. Speak to a Rodgers Reidy adviser before the clock starts running.
There Is a Better Path. But the Clock Is Running
The Small Business Restructure (SBR) under Part 5.3B of the Corporations Act is one of the most effective tools available to eligible companies. You stay in control of the business. A registered practitioner helps you put a debt plan together. Creditors vote.
To be eligible for a Small Business Restructure, your business must:
- Have total liabilities under $1 million, this includes all debts, not just the ATO amount
- Have all tax lodgements current, outstanding returns need to be filed before the process can begin
- Have employee entitlements paid in full, wages, super and leave must be up to date
If a DPN has already arrived and you’ve fallen behind on lodgements, or if cumulative debt has grown past the $1 million dollar threshold, the SBR option may no longer be available.
If you’re unsure whether your business currently meets these criteria, it’s worth getting that assessed sooner rather than later. Eligibility can change quickly once a DPN arrives or debt levels rise
Payday Super: A New Pressure Point From 1 July 2026
From 1 July 2026, Payday Super adds another pressure point. Superannuation must reach employees’ funds within 7 business days of every pay run, not quarterly. For cash-strapped businesses that have been managing super as a quarterly buffer, that change is material.
When a super payment is late under the new rules, the Superannuation Guarantee Charge applies per employee, per payday, with interest compounding daily. While the ATO has confirmed a risk-based compliance approach during the first year of the new regime, employers who do not promptly correct shortfalls may face escalating penalties and personal liability exposure under a lockdown DPN. The quarterly grace period that many businesses have relied on to manage cash flow will no longer exist.
If your business is currently using the quarterly super cycle to manage cash flow, now is the time to assess what that means after 1 July. Our detailed article on Payday Super and Small Business Restructuring covers what the change means in practice and what steps are available.
“84,000+ DPNs in a single financial year. A 136% increase. The ATO is not sending signals anymore, it is enforcing.”
Concerned about your position?
Rodgers Reidy offers confidential, obligation-free initial consultations for directors under financial pressure. The earlier you have that conversation, the more options remain available. Speak to one of our experts today.
Find your nearest Rodgers Reidy office →
Related reading: Director Penalty Notices: Navigating Personal Liability | DPN 21-Day Action Guide | Payday Super & Small Business Restructuring | Personal Guarantees: What Directors Need to Know | Voluntary Administration & Safe Harbour
