Director penalty notice funding

The short version: a director penalty notice (DPN) makes you personally liable for your company’s unpaid PAYG withholding, GST and super, and the time to act is short. If your company or trust owns property with equity, you can often raise capital against it fast enough to pay the ATO in full and remove the personal liability — without refinancing your existing mortgage.

What a director penalty notice puts at risk

A DPN lifts the corporate shield. It makes you, as a director, personally liable for three of the company’s tax debts: PAYG withholding, the superannuation guarantee charge, and net GST. The notice is posted to your address on the ASIC register, and the ATO treats it as served from the date it’s sent, not the date you open it. From that date, you have 21 days.

There are two kinds. A non-lockdown notice — where the company lodged its statements on time but didn’t pay — gives you 21 days to act. A lockdown notice — where statements were lodged late or not at all — locks the liability onto you, and the only way to clear it is to pay the debt in full.

How funding clears the deadline

Paying the company’s ATO debt in full remits the penalty. That holds for both kinds of notice, and for a lockdown DPN it’s the only route. The constraint is usually time and cash, not willingness.

If the company or trust holds property with equity, a caveat loan or second mortgage can release that equity in days — sitting behind your existing mortgage, so there’s no refinance and no disturbing the first facility. The capital pays the ATO before the 21 days run out, the penalty is remitted, and you exit the loan through a refinance, a sale, or the cash flow that was always coming.

When this works — and when it doesn’t

This suits a viable company with real equity, a clear exit, and a DPN debt that’s the main problem. It’s the right tool when the business is sound and the deadline is the threat.

It isn’t the answer if the company can’t realistically keep trading. Borrowing to pay one creditor in a business that’s going under rarely helps, and can create other problems. Speak to your accountant or an insolvency practitioner about restructuring or administration first. We’re comfortable telling you when funding isn’t the right move.

What we’ll need to move

The security details, the rough numbers, your exit, and a copy of the notice. We assess on the asset and the exit, not full financials — indicative terms in 24 to 48 hours, settlement in days, subject to assessment.