Treat deadlines seriously
A DPN and other ATO enforcement actions have legal consequences and should be reviewed immediately with qualified advisers.
Director penalty notices
A DPN is a legal and tax matter first; funding is only one possible commercial input.
This page explains how a future business-funding discussion may interact with a company that has PAYG withholding, GST or super guarantee charge arrears. It is not a guide to responding to a Director Penalty Notice.
What matters
Start with the commercial reality.
Funding should address a defined business need and sit within a credible plan for the company after the facility is advanced.
Map company and director exposure
Separate the company tax balance from any director-level liability and confirm lodgment history and timing.
Assess viability independently
A lender still needs to determine whether the underlying company is viable and whether additional debt improves its position.
What the ATO says
The ATO states that company directors can become personally liable for unpaid PAYG withholding, GST and super guarantee charge, and that it may recover director penalties after issuing a DPN. See the ATO’s current debt-enforcement information.
Lodgment timing can matter
The ATO practice statement describes circumstances in which director penalties can become “locked down” depending on reporting and timing. Specialist advice should be obtained on the facts of the particular company.
What funding can and cannot do
A commercial facility may provide liquidity to pay an eligible company liability if approved. It does not provide legal advice, determine whether a DPN is valid, extend a statutory deadline or guarantee remission of director liability.
Information for a future credit discussion
A lender may need current ATO accounts, lodgment history, DPN/statutory-demand status, financial statements, bank statements, cash-flow forecast, other creditor positions and details of any restructuring advice already obtained.
Important: Nothing on this page should delay action on a DPN, statutory demand, winding-up application or insolvency concern. Those matters require appropriately qualified professional advice.
Official sources & further reading
General information only. This page does not constitute legal, tax, financial or credit advice. SME Capital Partners is in pre-launch and is not currently offering or approving credit through this website.