Key Takeaways
- The Tax Ombudsman launched a formal review of the ATO’s administration of Director Penalty Notices (DPNs) on 2 September 2026; consultation closes 29 September 2026.
- In 2024–25, the ATO issued more than 84,000 DPNs — a 136% increase on the prior year.
- The review does not pause or change DPN obligations. Directors remain personally liable under Division 269 of Schedule 1 of the Taxation Administration Act 1953.
- A “lockdown” DPN — triggered when company BAS or SGC statements are more than 3 months overdue — cannot be extinguished by appointing a voluntary administrator or liquidator. Directors must pay personally.
- Queensland directors facing DPN exposure need legal advice urgently — the 21-day response window is absolute and cannot be extended.
On 29 September 2026, the Tax Ombudsman’s formal review of the Australian Taxation Office’s administration of Director Penalty Notices closes for public consultation. The review — announced on 2 September 2026 — was triggered by a dramatic 136% increase in DPNs issued by the ATO in 2024–25, with more than 84,000 notices issued to directors of approximately 64,000 companies. If you are a company director in Queensland and you have not heard of a Director Penalty Notice, this article is essential reading.
What Is a Director Penalty Notice?
A Director Penalty Notice is a formal demand issued by the ATO under Division 269 of Schedule 1 of the Taxation Administration Act 1953 (Cth). It makes a company director personally liable — out of their own pocket, not the company’s — for certain unpaid company tax debts, including:
- PAYG withholding (amounts withheld from employee wages that were not remitted to the ATO)
- Goods and Services Tax (GST)
- Superannuation Guarantee Charge (SGC) — unpaid compulsory superannuation
The liability is not theoretical. Once a DPN is issued, the director has 21 days to take one of three steps to extinguish personal liability: pay the debt, appoint a voluntary administrator to the company, or appoint a liquidator. Miss that window, and you are personally on the hook.
There are two types of DPN, and the distinction is critical.
Type 1: Standard DPN (Remittance DPN)
Issued where company BAS or SGC statements have been lodged on time, even if the underlying debt has not been paid. In this scenario, the director can extinguish personal liability within 21 days by placing the company into voluntary administration or liquidation.
Type 2: Lockdown DPN
Issued where company BAS or SGC statements are more than 3 months overdue at the time the DPN is issued. This is the far more dangerous version. A lockdown DPN cannot be extinguished by voluntary administration or liquidation. The director’s only options are to pay the debt personally or challenge the notice in court. Appointment of an insolvency practitioner is irrelevant to a lockdown DPN — the personal liability is locked in.
With the ATO issuing DPNs at record rates, understanding which type you are facing — and responding within 21 days — is the most urgent thing a director can do.
What the Tax Ombudsman Review Actually Found (and What It Doesn’t Change)
The Tax Ombudsman’s review was initiated in response to a surge in DPN enforcement that has alarmed the accounting and legal community. The numbers are stark: in 2023–24, the ATO issued approximately 36,000 DPNs. In 2024–25, it issued more than 84,000 — a 136% increase.
Tax Ombudsman Ruth Owen has stated the review will examine three key questions:
- Communication: Does the ATO provide current and former directors with adequate and timely information about their obligations, the director penalty, the underlying tax debt, and the actions available to them?
- Fairness: Does the ATO appropriately and consistently consider the circumstances of affected directors, including during the debt recovery process — particularly where the director was unaware of liabilities, was ill, or was a victim of coerced directorship or financial abuse?
- Proportionality: Does the ATO’s approach appropriately respond to vulnerable circumstances?
Owen has noted that some directors “may not fully understand these tax obligations, the personal consequences of failing to meet them, or that late lodgment may significantly limit their options for resolving their personal liability.”
The critical point for Queensland directors: The Ombudsman’s review does not suspend, delay, or alter DPN obligations. While the review is under way — and until the final report is published in April 2027 — the ATO’s DPN powers remain fully operative. Directors cannot wait for the outcome of a review before acting. The 21-day clock runs regardless.
Why the ATO Issued 84,000 DPNs in One Year
The surge in DPN enforcement reflects a deliberate policy shift by the ATO following the COVID-era moratoriums on debt collection, which resulted in billions of dollars in accumulated tax debt across Australian small and medium businesses.
In 2022 and 2023, the ATO began unwinding its “softly softly” approach and by 2024–25 had ramped enforcement to levels not seen before. The decision to issue 84,000 DPNs in a single year reflects the ATO treating director personal liability as a mainstream debt recovery tool — not an exceptional measure of last resort.
In Queensland, this has translated into a significant increase in directors being personally pursued for company tax debts they may not even have known existed. Common scenarios include:
- Former directors who resigned from a company but whose directorship was not properly recorded with ASIC — still personally liable for debts that accrued during their time
- Passive or silent directors (including spouses or family members appointed for administrative convenience) who had no actual involvement in managing the company’s tax affairs
- Directors of struggling businesses who kept the company running, hoping to trade through, while BAS and SGC statements went unfiled
- Victims of coerced directorships — a growing area of concern where people were appointed as directors without their knowledge or meaningful consent, often as part of financial abuse schemes
The Tax Ombudsman’s 2025 review into financial abuse within the tax system specifically identified coerced directorships as a mechanism used to impose DPN liability on victims. The 2026 DPN review builds directly on those findings.
What This Means for Queensland Directors Right Now
The Ombudsman’s review signals that the current DPN regime has real fairness problems. But it does not change the legal landscape directors face today.
If you are a director of a Queensland company, you need to take the following steps now:
1. Check whether your company’s BAS and SGC statements are up to date.
If PAYG withholding, GST, or superannuation statements are more than 3 months overdue, you are at immediate risk of a lockdown DPN. Once that DPN issues, your options narrow dramatically — personal payment or a court challenge are the only paths.
2. Check your ASIC directorship records.
If you resigned from a company but the resignation was not lodged with ASIC, you may still be recorded as a director and remain exposed to DPN liability. Check ASIC Connect and confirm your status.
3. If you have received a DPN — act immediately.
The 21-day window is absolute. There are no extensions, no discretions, and no ability to negotiate more time. Legal advice on day one is not a luxury — it is a necessity.
4. If you are a director of a company in financial difficulty — don’t wait.
Voluntary administration under Part 5.3A of the Corporations Act 2001 (Cth) can extinguish personal liability under a standard DPN if appointed within 21 days of the notice issuing. For a company in genuine financial distress, early action is dramatically better than late action.
5. If you believe you have been named as a director without your consent — get advice urgently.
Coerced or fraudulent directorships are a real problem, and the Ombudsman’s review is examining how the ATO deals with these situations. Legal advice can help you document your position and respond appropriately.
Lessons and Action Points
1. The DPN regime is not going away — it is intensifying.
The 136% increase in DPN issuance is not a blip. It reflects a structural shift in how the ATO recovers tax debt from companies. Directors need to treat tax compliance as a personal liability matter, not just a company accounting matter.
2. The Ombudsman review may lead to procedural reforms — not liability reforms.
The review is examining how DPNs are administered, not whether they should exist. Directors should not expect the April 2027 report to reduce their legal exposure under the existing regime.
3. The 21-day clock has no mercy.
Queensland directors who receive a DPN and wait — for advice from an accountant, for a second opinion, for the company’s cash flow to improve — risk losing all options. Once the 21 days expire on a lockdown DPN, personal liability is permanent.
4. Passive and former directors are as exposed as active ones.
The ATO does not distinguish between the director who made every decision and the director who signed their name on documents once. Legal advice on how your specific directorship role bears on DPN exposure is essential.
5. Early legal advice is the cheapest form of protection.
A conversation with an experienced commercial lawyer in the first 48 hours after receiving a DPN costs a fraction of the liability at stake. The math is straightforward.
How Boss Lawyers Can Help
We regularly act for company directors who have received Director Penalty Notices and need to understand their options quickly. Whether you have received a standard remittance DPN or a lockdown notice, the 21-day window requires immediate and strategic advice.
We also act for directors who believe they have been incorrectly identified as liable — former directors whose resignations were not properly processed, passive directors who were not involved in the company’s financial management, or individuals who were named as directors without their knowledge.
If you are a Queensland director facing DPN exposure, do not wait.
Call Mark Harley on 1300 267 711 for urgent advice.
You can also learn more about our insolvency and director advisory services.
Frequently Asked Questions
What happens if I ignore a Director Penalty Notice?
If you do not take action within 21 days of the DPN being issued, the ATO can commence proceedings to recover the debt from you personally. This includes garnishing your personal bank accounts, registering a charge over your real property, or seeking a court judgment against you. Ignoring a DPN is never the right strategy.
Does the Tax Ombudsman review change my DPN obligations?
No. The Ombudsman’s review is examining how the ATO administers DPNs — not the legal basis for them. Until Parliament amends the Taxation Administration Act 1953, the regime remains fully operative. Queensland directors cannot rely on the review as a reason to delay responding to a DPN.
Can I challenge a DPN in court?
Yes. A director can apply to the Federal Court or Federal Circuit and Family Court to have a DPN set aside on specified grounds — for example, that the DPN was not issued correctly, that you were not a director at the relevant time, or that the underlying debt does not exist. However, these challenges require urgent legal action and strong factual grounds. The 21-day window continues to run regardless of whether a challenge is being prepared.
If you have received a Director Penalty Notice or are concerned about your exposure as a company director, Boss Lawyers’ director disputes practice can advise you on your options within the 21-day response window. Our team also regularly acts for creditors and directors in insolvency and restructuring matters across Queensland, including responding to Director Penalty Notices. Contact Mark Harley on 1300 267 711 for urgent advice.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Mark Harley is the Principal Solicitor of Boss Lawyers Pty Ltd, a commercial litigation and insolvency law practice based in Brisbane, Queensland. Boss Lawyers regularly acts for directors, creditors, and businesses navigating insolvency, debt recovery, and director liability matters.
