ATO Debt Recovery and Director Penalty Notices

During the early days of COVID-19, the ATO shifted its focus away from debt collection action to help businesses and the community experiencing challenges because of the pandemic.

Recently, the ATO has recommenced collection activity for unpaid business debts, including issuing director penalty notices (DPN), disclosure of business tax debts to credit score agencies, and legal actions including summons, creditors petition, wind-up and insolvency action.

More about the Director Penalty Notices

As a company director, you are responsible for ensuring that the company’s tax and super obligations are reported and paid on time. If your company does not pay certain liabilities by the due date, the ATO can recover these amounts from you personally as a current or former company director. DPNs can be issued for unpaid PAYG withholding, superannuation guarantee, GST, WET and LCT.

Since April 2022, the ATO has sent thousands of letters to directors notifying them about impending action. DPNs have been issued to directors who have not replied to earlier ATO correspondence and have not otherwise engaged with the ATO about their debts.

If you have received a letter about ATO debt recovery, talk to the Kennedy Cross team. We can help manage your finances so your business operations can continue uninterrupted.

Talk to Us About Your Business Liabilities

  • Are you clear about what you owe the ATO?
  • Do you need assistance arranging a payment plan with the ATO?
  • Are you aware of the extent and financial implications of your personal liability?
  • Have you given director guarantees to suppliers that might increase your individual liability?
  • Are your ASIC details correct?
  • If a notice is issued to an incorrect address listed on ASIC, legal recovery will go ahead whether the director receives the notice or not if contact is not made within 21 days of the letter’s date.  It is the Director’s responsibility to ensure their contact details are up to date on ASIC.

If you are considering taking on a new position for an existing company, check the status of the financial obligations of that company before accepting the position, as new directors may become liable for existing debts.

Equally, if you resigned from a directorship position, don’t ignore a DPN notice if you receive one, as the notice may relate to the time you were a director.

Contact us to learn more about managing your business finances so you can continue running the business you love.

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