Received an ATO warning letter or Director Penalty Notice? Don’t panic—quick action can protect your business and your future.
This article explains what a DPN is, why the ATO is issuing more in 2025, and how a small business restructure (SBR) can help with ATO debt.
A Director Penalty Notice (DPN) is a letter from the ATO that holds directors responsible for unpaid business tax debts like GST, PAYG, and super.
There are two main types:
Issued when your taxes are lodged but not paid. You have 21 days to pay debts in full or appoint a restructuring practitioner, administrator, or liquidator.
You’re already personally liable, and your only option is to pay the debt.
If you get a non-lockdown DPN, you still have options (if you act quickly).
The ATO is taking a firmer approach to unpaid tax. By June 2025, collectable debt had grown to more than $50 billion, with small businesses responsible for around two-thirds. Most of this is from unpaid GST, PAYG withholding, and superannuation.
To encourage action, the ATO is now issuing Director Penalty Notices (DPNs) more often. In the 2024–25 financial year alone, over 84,000 DPNs were sent to directors, along with thousands of garnishee notices and credit reporting disclosures.
This shift is affecting businesses across all industries — including construction, hospitality, retail, and professional services. Directors of multiple companies are under closer watch, especially where tax debts have built up in more than one business.
If your business has fallen behind on GST, PAYG, or super, there’s now a higher chance of receiving a warning letter or DPN from the ATO — in which case, entering a restructuring plan may be your best option.
Ignoring a non-lockdown DPN means you miss the chance to restructure and avoid personal liability.
With a lockdown DPN, you’re already personally liable and could face court, bankruptcy, or asset seizure if you don’t pay upon expiry of the DPN.
Ignoring a DPN can hurt your credit rating and make it harder to get finance later, so seeking support is crucial.
Small business restructuring is a practical, positive solution if you have a non-lockdown DPN.
Appointing a registered SBR practitioner allows you to:
To qualify for SBR, your:
If you wait too long, your debts could go over the limit and make you ineligible
For a lockdown DPN, negotiation won’t remove your liability. For a non-lockdown DPN, you can pay in full or appoint a small business restructuring practitioner, but you must act within 21 days of the date of the DPN.
The SBR process is public, but it’s seen as a positive step compared to liquidation. It also has a higher success rate than voluntary administration.
Your plan has a great chance of approval if you offer realistic payments, have a good tax history, and show your business can keep running. Choose an expert with proven results for a greater chance of success.
If you get an ATO warning letter or Director Penalty Notice, you now know what it means, why it’s happening, and the positive steps you can take to protect your business.
These notices are serious — they can turn business debt into personal debt within 21 days. However, effective debt management strategies, including SBR, can protect both your business and personal assets.
At mySBR, we guide small business owners through the SBR process and have a strong record of client success.
Book a confidential call now to find out if SBR can resolve your DPN and secure your business and personal assets.
Not ready to take the next step just yet? Subscribe to the SALEA Advisory mailing list for the latest updates on Small Business Restructuring, helpful resources, and news to support your business through financial challenges.
Take the first step toward a stronger future for your company. Contact us today.
We help small business owners move through short-term financial pressure with a clear plan and practical support — so they can protect what they’ve built and look ahead to a promising future.
Book your free consultation to determine if our Small Business Restructuring services are right for your company.
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