Director’s Penalty Notice – Scenario

The ATO had issued all three directors of a small company with a Director’s Penalty Notice. They had taken no action and, after 21 days elapsed, the Notice had defaulted. The ATO was about to wind up the company and the three Directors would become personally liable for the unremitted PAYG debt. Two risked having to sell their homes within a very short time frame.

A positive way forward

The company has reasonable prospects of trading out of its position. Corporate Guardian sourced finance and this is used to pay the ATO as well as injecting a small amount of working capital that the business needed to purchase raw materials. The Penalty Notices are satisfied and the business is able to continue trading.

What to do when you receive a Director’s Penalty Notice

If you have received a Director’s Penalty Notice, there are a number of standard options available to you:

  • You can enter into a payment arrangement with the ATO
  • Appoint an Administrator
  • Appoint a Liquidator
  • Pay the penalty in full.

If you do nothing, after the 21 day period has elapsed, the debt owed to the ATO by the company becomes the personal liability of the director.

How we can help

We understand the technicalities of each option and can provide you with guidance on the business and personal ramifications of each. In many cases we can also source the funding needed to pay the ATO and to have the Penalty Notice withdrawn.

Please note: These scenarios are intended to illustrate the type of problems that our clients experience and the possible remedy. They are not intended to portray real companies or real case studies.

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