The DPN surge: are directors paying attention?

The ATO issued a record 84,000 Director Penalty Notices (DPNs) in FY2024–25, yet many are still being missed, overlooked or ignored. And when a notice slips through the cracks, the result can be devastating – directors face personal liability that puts homes, savings and futures at risk.

For directors, accountants and other advisers, the message is clear: act quickly, keep contact details up to date, and understand the serious consequences of delay. At Jirsch Sutherland, we’re seeing a sharp rise in directors blindsided by DPNs, often because a notice sat unopened at an old address or wasn’t spotted in a MyGov portal until it was too late. Whether through naivety, misplaced optimism, or a conscious decision to turn a blind eye, ignoring a DPN is not an option.

The scale of the issue is significant. In FY2023–24, the ATO issued 26,702 DPNs, representing an estimated $4 billion in liabilities. Just one year later, that figure more than tripled, highlighting the ATO’s tougher compliance stance.

A growing compliance challenge

At the recent Tax Institute Tax Summit, Deputy Commissioner Anna Longley revealed that collectible tax debt has ballooned to more than $50 billion, with small businesses owing almost two-thirds. Much of this relates to activity statement liabilities and unpaid superannuation – precisely the types of debts that trigger DPNs.

The ATO is now escalating enforcement, and yet we still encounter directors who claim they never received the notice. The problem is often an outdated ASIC-registered address, however, the Courts have made clear: saying “I never saw it” is no defence. That’s why it’s essential that directors update ASIC and ATO records immediately if they change address. Too often, notices sit unopened at an old address or even in an accountant’s in-tray, leaving directors unaware until their options have evaporated.

In addition, the ATO will also typically lodge a copy of the DPN in a director’s personal MyGov portal, so directors must stay vigilant and respond promptly to any notifications.

Lockdown vs Non-Lockdown DPNs

A common area of confusion is the difference between lockdown and non-lockdown notices:

• Non-lockdown DPNs apply where BAS, IAS or superannuation guarantee statements have been lodged but debts remain unpaid. Directors have 21 days to either:
  • pay the debt in full
  • appoint a voluntary administrator
  • appoint a restructuring practitioner, or
  • place the company into liquidation.

• Lockdown DPNs apply where lodgements weren’t made on time. In these cases, liability is “locked down” – the only way to avoid personal liability is to repay the debt in full. Administration or liquidation won’t extinguish the liability.

Understanding the difference is critical, but many directors only learn it when it’s too late.

We strongly advise that all company lodgements are made on time, even if payment can’t be made. This ensures directors retain the option to address a DPN under the Non-Lockdown scenario.

The ATO’s firm approach

The ATO’s 2025–26 Corporate Plan reinforces its stance: “complying is easy, help is tailored, deliberate non-compliance has consequences”. Early engagement may open the door to payment plans, but ignoring or delaying will almost certainly lead to stronger action.

As Deputy Commissioner Longley explained, the ATO’s enforcement is guided by four principles:

1. Be firm, consistent and clear that those who can pay must do so on time.
2. Support those with capacity who are facing temporary hardship.
3. Apply stronger actions against those deliberately not engaging or not paying.
4. Assist those without capacity to pay to exit the system in an orderly way.

A call to advisers

For accountants and other trusted advisers, vigilance is essential. Many directors first turn to them when a DPN arrives – or worse, after the 21 days have lapsed. Guiding clients to act promptly can be the difference between a manageable restructuring and personal financial ruin.

For directors, the message is simple: don’t ignore a DPN and don’t assume the problem will fix itself. If you’ve moved address, update your ASIC and ATO contact details. If you receive a notice, act immediately and seek expert advice.

The bottom line

The surge to 84,000 DPNs in the last financial year shows the ATO is serious about recovering unpaid debts, especially from the small business sector. Ignoring a notice –whether through naivety, misplaced hope, or outdated records – is no longer an option.

Directors who respond quickly – and advisers who ensure their clients understand the risks – are far better placed to protect both businesses and personal assets.

At Jirsch Sutherland, we work closely with accountants and their clients to manage these situations, offering practical pathways that minimise damage and safeguard futures.

Andrew Mattinson
Partner
Jirsch Sutherland