A lockdown director penalty notice is a DPN where the company lodged its BAS more than 3 months after the due date, or lodged its SGC statement after the SGC due date, so the director’s personal liability is locked in and full payment of the debt becomes the only remission pathway. The lockdown outcome is decided at the lodgement date, months before the notice arrives.
The 21-day options that remit a standard DPN, voluntary administration, small business restructuring, and liquidation do nothing against a lockdown DPN. The ATO issued 84,529 director penalty notices covering $5.5 billion in liabilities in FY2024-25, a 136 per cent rise on the prior year.
What Is a Lockdown Director Penalty Notice?
A lockdown director penalty notice is a DPN that cannot be remitted by putting the company into administration, restructuring, or liquidation, because the company reported its tax debts late. The notice itself looks the same as a standard, non-lockdown DPN. The lodgement history behind it decides which type a director holds.
The director penalty regime sits in Division 269 of Schedule 1 to the Taxation Administration Act 1953. A DPN makes a director personally liable for three company debts: PAYG withholding, GST, and superannuation guarantee charge (SGC). GST joined the regime for tax periods from 1 April 2020, and the extension is not retrospective.
The company debt and the director penalty run as parallel liabilities. The company owes its debt to the ATO, and the director owes an equal penalty personally. A payment arrangement on the company debt leaves the director penalty in place.
When Does Late Lodgement Trigger a Lockdown DPN?
Lodging a BAS more than 3 months after its due date, or lodging an SGC statement after its due date, converts the director penalty into a lockdown penalty automatically. Two separate timing rules apply, and each rule attaches to a different debt type.
The 3-Month Rule for PAYG Withholding and GST
PAYG withholding and GST amounts reported within 3 months of the BAS due date attract a standard, remittable DPN. Amounts reported more than 3 months late attract a lockdown DPN. Amounts never reported at all fall under lockdown too, and an ATO estimate of the debt counts as never reported.
A company on a tax agent’s concessional BAS due date measures its 3 months from the concessional date, not the original one.
Here is the rule in dates. A Q1 BAS falls due on 28 October. The lockdown line sits at 28 January. Director A lodges on 20 January without paying a cent: the penalty stays remittable, and every option remains open. Director B lodges on 3 February with the same debt: the penalty locks, and the options are gone. Fourteen days apart, opposite outcomes.
The Due-Date Rule for Superannuation
An SGC statement lodged by its due date keeps the director penalty remittable, and a statement lodged one day late locks it. The 3-month rule never applies to super. The SGC test runs on the due date alone.
The SGC statement due date falls on the 28th day of the second month after the quarter ends.
Super unpaid for the July to September quarter must be reported by 28 November. A statement lodged on 29 November locks the director penalty on the spot. The ATO states the rule plainly on its director penalties page: SGC amounts reported after the SGC due date can only be remitted by paying the company liability in full.
What Does a Lockdown DPN Take Away From You?
A lockdown DPN removes every remission pathway except paying the company debt in full. The table below sets out what works against each notice type.
Action within 21 days | Non-lockdown DPN | Lockdown DPN |
|---|---|---|
Pay the debt in full | Remits the penalty | Remits the penalty |
Appoint a voluntary administrator | Remits the penalty | No effect |
Appoint a small business restructuring practitioner | Remits the penalty | No effect |
Appoint a liquidator | Remits the penalty | No effect |
Enter an ATO payment plan | Does not remit | Does not remit |
The liquidation row deserves a second look. Many directors believe winding up the company clears the slate. Against a lockdown DPN, it does not. The penalty survives liquidation, survives deregistration, and follows the director personally.
The 21-day period starts when the ATO posts the notice to the director’s address on the ASIC register. The clock runs in calendar days from the postmark, not from the day the director opens the envelope. Under a standard DPN, those 21 days hold four live options. Under a lockdown DPN, the 21 days are a payment deadline and nothing more.
A DPN also carries no expiry date. An unactioned notice stays enforceable, and the ATO can move to garnishee notices, director penalty proceedings, or bankruptcy at any point.
Why Is the Outcome Decided Before the Notice Arrives?
The lodgement date fixes the DPN type, so the real decision point is the day the BAS or SGC statement falls due, not the day the notice lands. The notice is a messenger. The verdict was written months earlier, when the lodgement went in late or stayed missing.
This reverses how most directors think about a DPN. The panic starts when the letter arrives, but by then the notice type is already set. A director who lodged on time holds a non-lockdown penalty and four exits. A director who lodged late holds a locked debt and one exit.
Lodgement is the single variable a director controls. On-time lodgement without payment preserves small business restructuring and liquidation pathways that can remove the full personal exposure. Late lodgement converts the same amount into a personal debt that no company appointment can touch.
The enforcement climate makes the timing rules sharper. The ATO issued 84,529 DPNs in FY2024-25 against 26,702 the year before, alongside more than 15,000 garnishee notices, according to its 2024-25 Annual Report. The Tax Ombudsman opened a review of the ATO’s DPN practices on 4 December 2025. Directors sitting on unlodged BAS or SGC statements today face a regulator that issues notices at scale.
Which Defences Still Work Against a Lockdown DPN?
Three statutory defences under section 269-35 survive a lockdown DPN: illness, all reasonable steps, and a reasonably arguable position for SGC. The defences are narrow, and the courts read them narrowly.
The illness defence requires that illness or another good reason made it unreasonable for the director to take part in the management of the company for the entire relevant period. A director who stayed involved while unwell fails the test, as the Western Australian Court of Appeal confirmed in Roche v DCT.
The reasonable steps defence requires the director to show that all reasonable steps were taken to have the company pay, appoint an administrator, or wind up, or that no such steps were available. Courts test the defence across every option together, following Canty v DCT. For SGC only, a director can also argue the company took a reasonably arguable position on its super obligations under section 269-35(3A).
New Directors and the 30-Day Window
A new director is not liable for penalties that fell due before appointment if the company pays the debt, appoints an administrator or restructuring practitioner, or winds up within 30 days of the appointment. Resigning inside the 30 days does not meet the test. The window rewards action, not exit.
Why Resignation Does Not Release You
Resignation leaves a director liable for penalties tied to the period of appointment. The Canty decision closed that door two decades ago. A resignation notified to ASIC more than 28 days late takes effect from the ASIC lodgement date, which stretches the exposure window further. Serving as a director in name only, without real involvement, is not a defence either.
What Should You Do If a DPN Has Already Arrived?
A director holding a DPN has 21 days from the postmark to identify the notice type and act. The first step is checking the lodgement dates against the two timing rules above, because the type dictates every move that follows. The full response process, including how to read the notice and sequence the decision, sits in our guide to responding to a director penalty notice.
Why Lodging Without Paying Beats Not Lodging
Lodging a BAS on time without payment keeps the director penalty remittable, while holding back the lodgement to hide the debt locks it in. The instinct to wait until the cash exists is the exact behaviour that triggers lockdown. The ATO already knows the debt exists once the lodgement lands, and reporting it on time is what keeps the exits open.
Late lodgement also stacks separate penalties on the company itself. The failure to lodge regime runs on its own clock, covered in our guide to BAS due dates and late lodgement penalties. Unpaid amounts accrue general interest charge daily at 11.17 per cent, and GIC lost its tax deductibility from 1 July 2025, as explained in our analysis of GIC losing its tax deductibility.
Where Do ATO Payment Plans Fit?
An ATO payment plan covers the company debt but never remits the director penalty, under either DPN type. The reason is parallel liability. Two debts exist, and the plan services one of them. The director penalty only clears when the underlying company debt reaches zero. The entry conditions sit in our guide to ATO payment plan conditions for businesses.
How Does Payday Super Change SGC Exposure From July 2026?
Payday Super requires employers to pay super with every pay run from 1 July 2026, which multiplies the reporting events a director must keep on time. The measure is enacted and commences on 1 July 2026.
More frequent obligations mean more lockdown trigger points, and the SGC due-date rule stays as strict as ever. Employers can prepare with our guide to payday super obligations for employers.
Frequently Asked Questions
Can a lockdown DPN be remitted?
Full payment of the company debt is the only remission pathway for a lockdown DPN. The section 269-35 defences are the only other exit, and they apply in narrow circumstances.
Does liquidating the company cancel a lockdown DPN?
Liquidation remits a non-lockdown DPN within the 21-day window and has no effect on a lockdown DPN. The locked penalty survives liquidation and deregistration.
Can I avoid a director penalty notice by resigning?
Resignation leaves a director liable for penalties tied to the appointment period. A resignation notified to ASIC more than 28 days late widens the exposure window further.
Does a payment plan remit a director penalty?
A payment plan services the company debt and leaves the director penalty in place under both DPN types. The penalty clears only when the company debt reaches zero.
When does the 21-day period start?
The 21 days run from the date the ATO posts the notice to the director’s address on the ASIC register. The clock counts calendar days from the postmark, not from receipt.
Is there a 3-month grace period for super?
The 3-month rule applies to PAYG withholding and GST only. An SGC statement lodged even one day after its due date locks the director penalty.
Key Takeaways: Lodgement Timing Decides Your DPN Options
A director’s exposure under a lockdown DPN is fixed at the lodgement date, and on-time lodgement is the only lever that keeps every remission option open. The core points are summarised below:
- PAYG withholding and GST lock at 3 months past the BAS due date, while SGC locks the day after its due date, with no grace period.
- A lockdown DPN strips out administration, restructuring, and liquidation as exits, leaving full payment and the narrow section 269-35 defences.
- The 21-day period runs from the postmark and, under lockdown, functions as a payment deadline rather than a decision window.
- The ATO issued 84,529 DPNs in FY2024-25, so unlodged statements carry a live enforcement risk, not a theoretical one.
A director with unlodged BAS or SGC statements still holds options today that disappear at the lockdown line. Book your free 30-minute strategy session with one of our directors. We check your lodgement position against both timing rules and map your exposure before the ATO does. Blackwattle Tax works with growing Australian businesses and their directors to keep tax obligations reported on time with specialist, director-level attention.
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Disclaimer: We endeavour to make sure the information provided in this guidance is up to date and accurate. Please note, that the information is only intended to be a guide, with a general overview of information. This guidance is not a comprehensive document and should not be interpreted as legal advice or tax advice. The information is general in nature. You should seek the assistance of a professional opinion for any legal and tax issues related to your personal circumstances.