Director Penalty Notice

What is a Director Penalty Notice?

The Australian Taxation Office (“ATO”) may issue a Director Penalty Notice to the directors of the company in respect to the Company’s tax debt pursuant to Section 222AOE of the Tax Act. Under this section of the Act, the ATO has the power to collect outstanding tax by making the directors’ personally liable in the form of a penalty for the same amount as the tax debt.

The Director Penalty Notice allows the recipient strictly 21 days from the date of issue to comply with one of the following options:

  • Pay the tax debt if the company is solvent;
  • Enter into an Arrangement in writing with the Commissioner to pay the tax debt;
  • Appoint an administrator; or
  • Appoint a liquidator

If the Director fails to exercise one of the above options within the 21 days, the recipient will be personally liable for the Company’s tax liability. Therefore it is vital that the director’s address details are up to date or a Director Penalty Notice may be issued and 21 days may expire without the director being aware.

What should you do if you have received a Director Penalty Notice?

If you receive a Director Penalty Notice you should exercise one of the following options within 21 days of receipt of the Director Penalty Notice.

  • Pay the tax debt if the company is solvent;
  • Organise an arrangement with the ATO; or
  • Call us immediately on (02) 9231 0505 to provide you with FREE advice and assist you with your options