This is an example of a letter responding to a director penalty notice. This is the more conciliatory version of the letter.
Usually director penalty notices are received by directors or former directors of companies that are in trouble. The ATO will usually do an audit or try to work out in the absence of much information how much might have been owing by way of super or PAYG. Often it works out to be a big number and it is quite common for people to look at the number and think that it looks wrong.
This letter is in a format that challenges all aspects of the ATO claim, namely:
- To say the calculation is incorrect
- To say that the amount might have already been partially paid
- To say there is a defence available
Some of these aspects may not apply to you, in which case they should not be included in the letter.
This is an example only and may not be appropriate for your personal circumstances. This example comes with 15 minutes of free advice from Adam Ahmed & Co tax lawyers. If you wish to claim your free 15 minutes please call 02 7200 8200.
What is a Director Penalty Notice?
A Director Penalty Notice (“DPN”) is a Notice that the Australian Tax Office (“ATO“) can send a director that can make that director personally liable for two types of tax debts of a company – Pay As You Go (“PAYG“) and Superannuation Guarantee Charge (“SGC“) liabilities.
The DPN regime is set out in Division 269 of Schedule 1 of the Taxation Administration Act 1953. There are two types of Director Penalty Notices. The first is the traditional Director Penalty Notice which gives a director 21 days to take certain actions to avoid personal liability. The second type of DPN, often referred to as a “Lockdown DPN”, can make a director automatically personally liable for PAYG and SGC if company tax returns are not lodged on time – there is no opportunity to avoid that liability once the DPN is served on the director.