--- title: "ISSUE #174 - ATO again issuing Director Penalty Notices - Payment arrangements no longer accepted" description: ATO is back issuing DPNs image: https://content.koustas.com.au/hubfs/7c5ed63b-4b2e-43ff-9c1c-7563d1bc73bf.jpg --- [![Koustas](https://content.koustas.com.au/hubfs/Koustas_April2018/image/logo.svg)](https://koustas.com.au/) - [+613 8530 1600](tel:+613%208530%201600) - - - - - [Home](https://koustas.com.au/) - [About Us](https://koustas.com.au/about-us/our-mission-purpose-values.html) - [Our Mission, Purpose & Values](https://koustas.com.au/about-us/our-mission-purpose-values.html) - [Service Standards](https://koustas.com.au/about-us/service-standards.html) - [Careers](https://koustas.com.au/about-us/careers.html) - [Case Studies and Testimonials](https://koustas.com.au/about-us/case-studies.html) - [Awards](https://koustas.com.au/about-us/awards.html) - [Our Services](https://koustas.com.au/our-services.html) - [Accountants for Business](https://koustas.com.au/our-services/accounting-for-business.html) - 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This includes the issuing of Director Penalty Notices (DPNs). Directors become personally liable for a penalty equal to the value of certain company tax obligations, including superannuation, PAYG withholding and GST, if they are not paid when due. In order to commence proceedings to collect these amounts from a director, the ATO must first issue the director with a DPN. The options available to a director when they receive a DPN depends on the type of DPN. There are two types of DPNs:   **A ‘Non-Lockdown’ DPN**, which can be issued where: 1. a company has lodged business activity statements (BAS) and instalment activity statements within three months of the due date; and 2. has lodged superannuation guarantee charge (SGC) statements within one month and 28 days after the end of the quarter that contribution relates to; but 3. has not paid the relevant amounts owed. **A ‘Lockdown’ DPN**, which can be issued where a company has not lodged their BAS or SGC statements within the above timeframes and not paid the relevant amounts. The only option available to a recipient of a Lockdown DPN is to pay the penalty or rely on one of the relevant statutory defences, such as director illness, if available. However, recipients of ‘Non-Lockdown’ DPNs can avail themselves of one of the options set out in the notice within 21 days to avoid the penalty.   ## Directors can no longer avoid a penalty by entering the company into a payment plan   Prior to the pandemic, the options available to directors in a Non-Lockdown DPN were: 1. The company’s tax liability is discharged; 2. The company went into administration; 3. The company went into liquidation; or 4. The company entered into an arrangement under section 255-15 in Schedule 1 to the *Taxation Administration Act 1953* (Cth) (i.e. a payment arrangement).   The options available to a director within the 21 days are now: 1. The company complies with its obligation to pay the unpaid amount to the ATO; 2. The company goes into administration; 3. The company appoints a small business restructuring practitioner (SBRP); or 4. The company goes into liquidation.   The SBRP option has been included given the introduction of the [SBRP regime](https://www.smartcompany.com.au/business-advice/legal/insolvency-overhaul-bankrupt-small-businesses/) on January 1, 2021. Noticeably missing is the option for the company to enter into a payment arrangement. Significantly, this means that directors can no longer avoid personal liability for a penalty under a Non-Lockdown DPN by causing the company to enter into a payment arrangement in relation to the outstanding liability within the 21 days. The deletion appears to be in line with the Full Court of the Federal Court’s decision in [Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy](https://jade.io/article/708045), that a payment arrangement does not cause a tax debt which was due and payable to cease to be due and payable. The removal of the payment arrangement option will inevitably mean that more directors who receive DPNs will put their companies into administration or liquidation or appoint a SBRP. **Key takeaway:** A director can no longer enter into a payment arrangement to avoid personal liability for tax debts that are the subject of a Non-Lockdown Director Penalty Notice. *Courtesy: SmartCompany and Hall & Willcox* [Back to The Koustas ORAcle](https://content.koustas.com.au/blog) You can find us on: [![Koustas](https://content.koustas.com.au/hubfs/Koustas_April2018/image/logo.svg)](https://koustas.com.au/) L9 636 St Kilda Road, Melbourne VIC 3004 PO Box 6750, St Kilda Road Central VIC 3004 [+613 8530 1600](tel:+613%208530%201600) [+613 8530 1616](https://content.koustas.com.au/blog/atodpn#+613%208530%201616) - Quick Navigation - [Home](https://koustas.com.au/) - [About Us](https://koustas.com.au/about-us/our-mission-purpose-values.html) - [Our Services](https://koustas.com.au/our-services.html) - [Industries](https://koustas.com.au/our-services/accounting-for-business.html) - [Our People](https://koustas.com.au/our-people.html) - [Client Resources](https://koustas.com.au/client-resources/the-koustas-oracle.html) - [Contact](https://koustas.com.au/contact.html) ### Our Accreditations [![Chartered Accountants](https://content.koustas.com.au/hubfs/Koustas_April2018/image/chartered-accountants.png)](http://www.charteredaccountants.com.au/) [![Tax Institute](https://content.koustas.com.au/hubfs/Koustas_April2018/image/the-tax-institute.png)](http://www.taxinstitute.com.au/) [![Self Managed](https://content.koustas.com.au/hubfs/Koustas_April2018/image/self-managed-super-fund-association.png)](http://www.smsfassociation.com/) [![Australian Institute](https://content.koustas.com.au/hubfs/Koustas_April2018/image/australian-institute-of-company-directors.png)](http://aicd.companydirectors.com.au/) [![xero](https://content.koustas.com.au/hubfs/Koustas_April2018/image/xero-partner.png)](https://www.xero.com/au/) ### Newsletter + The Koustas Oracle Liability limited by a scheme approved under Professional Standards Legislation Copyright © 2018 Koustas+Co. 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