Finance question
What is a director penalty notice and can I refinance out of it?
A director penalty notice, or DPN, makes you personally liable for certain unpaid company tax debts, usually PAYG withholding, GST and super. Refinancing can clear it: if you own property, borrowing against the equity to pay the debt removes the liability and stops the ATO acting on it. It comes down to having security and moving before the deadline.
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The short answer
A DPN is personal, and refinancing can clear it
A director penalty notice is the ATO's way of pushing a company's unpaid tax onto its directors personally. It applies to PAYG withholding, GST and superannuation guarantee amounts. Once the ATO issues one, the company debt becomes your debt, and ignoring it can lead to the ATO recovering it directly from you.
There are two kinds, and the difference is the timeline. A non-lockdown DPN can be dealt with by paying the debt, appointing an administrator or liquidating within the notice period. A lockdown DPN, issued when lodgements are very late, can usually only be resolved by paying it. Either way, clearing the debt is the clean exit.
This is where property-backed finance comes in. If you own real estate, you can often borrow against the equity to pay the tax debt in full, which removes the penalty and stops the ATO acting. These deals sit at single-digit rates, many need no financials, and ATO debt itself does not block them. The key is moving before the notice period runs out.
Do you qualify?
What makes a DPN refinance work.
Property equity
Equity in real estate to borrow against and pay the debt.
Time on the clock
Acting inside the notice period before the ATO moves.
The debt quantified
A clear figure for the PAYG, GST or super owed.
An active ABN
Companies and their directors both fit the picture.
Why refinancing beats letting it run
It removes the liability
Paying the debt in full clears the penalty against you personally.
Property secures it
Real estate keeps the rate in single digits, while the ATO charge sits well above that.
It stops the clock
Settling the debt takes the ATO's recovery action off the table.
A real example
A director receives a DPN for $180k of PAYG and super. They hold a home with $400k of equity, refinance to pay the ATO in full, and the penalty is cleared. The new facility is a single-digit-rate property loan, well below the ATO interest charge. Illustrative only, subject to valuation.
Common questions
Frequently asked questions
What debts does a DPN cover?
PAYG withholding, GST and superannuation guarantee amounts that the company has not paid.
Can I refinance out of a lockdown DPN?
Paying the debt is usually the only way to clear a lockdown DPN, and borrowing against property equity is a common way to do that.
Does the ATO debt stop me borrowing?
Not for property-backed lending. ATO debt is workable when real estate secures the facility.
How fast do I need to act?
Quickly. A DPN runs on a notice period, so the sooner the finance is arranged, the more options stay open.