What is a director penalty
As a company director you become personally liable for your company’s unpaid amounts of:
- pay as you go withholding (PAYGW)
- goods and services tax (GST)
- super guarantee charge (SGC).
These amounts that you are personally liable for are called director penalties. The ATO can recover the penalty amounts from you once they issue you a director penalty notice.
Director penalty notices
A Director penalty notice (DPN) is a notice the tax office must give you that allows them to recover the company’s unpaid amounts. The notice outlines the unpaid amounts and remission options available to you.
The tax office can recover the amounts of the director penalty by:
- issuing garnishee notices
- offsetting any of your tax credits against the director penalties
- initiating legal recovery proceedings against you to recover the director penalty.
If you are a current director, when the tax office gives you the DPN, they will use the address you registered with Australian Securities & Investment Commission (ASIC). Otherwise, they will use the address last known to them, therefore it is important you keep this address updated.
The date they post (or leave the DPN at the address registered with ASIC) is the date the notice is given to you.
If you receive a Director Penalty Notice, please contact your tax agent immediately.