The ATO can issue a Director Penalty Notice (DPN) to recover a company’s unpaid PAYG Tax, GST and superannuation from a company’s directors. These DPN provisions have been around for years. However, from 1 July 2026 the provisions relating to superannuation are changing – this is how.
From 1 July 2026 companies must pay superannuation to their employees at the same time as wages are paid. These payments must be received by an employee’s superannuation fund within seven business days of wages becoming payable. Where superannuation is not paid the ATO can recover it from company directors by issuing directors with a DPN.
There are two types of Director Penalty Notices (DPN) which the ATO can issue, which will apply as follows in respect of unpaid superannuation from 1 July 2026.
“Lockdown” Director Penalty Notices
“Lockdown” Director Penalty Notices apply where a company doesn’t pay superannuation and also doesn’t report SGC to the ATO by required dates. If this occurs the directors are automatically liable for SGC and the ATO can recover SGC from a director by issuing them with a DPN. In these circumstances placing the company in liquidation, or voluntary administration or appointing a small business restructuring practitioner will not avoid a director’s personal liability for SGC.
As set out above from 1 July 2026, companies are required to pay superannuation when they pay wages to employees and these payments must be received by an employee’s superannuation fund within 7 business days of wages being paid. If payments are not received by an employee’s superannuation fund within 7 business days of wages being paid then:
- A company must report the unpaid superannuation to the ATO.
- The ATO can estimate and make their own assessment of the amount of SGC owed at any time
- Directors will be personally liable for unpaid SGC via the ATO’s “Lockdown” Director Penalty Notice provisions at the earlier of 60 days after wages were payable or when the ATO estimates a company’s SGC liability.
Given the ATO can at any time estimate the amount of SGC owed by a company, directors can quickly become personally liable for unpaid SGC if the company does not report it to the ATO in a timely manner.
21-Day Director Penalty Notices
Where a company doesn’t pay superannuation but it reports it to the ATO within 60 days of wages becoming payable and before the ATO estimates a company’s SGC liability then the ATO can still issue a director with a DPN which can make the director personally liable for SGC. However, directors can avoid personal liability if the SGC is paid or the company is placed in liquidation or voluntary administration or a small business restructuring practitioner is appointed within 21 days of the date of the DPN.
What Should Director’s Do to Avoid Liability
It is important that if a company fails to pay superannuation on time that it quickly reports unpaid superannuation to the ATO. This is because if superannuation is not reported to the ATO, then at any time the ATO can estimate a company’s SGC liability and if an estimate is made a director will become liable for SGC. With the now mandatory use of single touch payroll and the impact of data matching, tools the ATO knows in real time when superannuation is not paid.
If a company reports SGC but cannot pay it, then a director should seek professional advice as to the options available as the ATO will now more than ever be seeking to pursue recovery of SGC debts.
Advice and Assistance
It is now more important than ever that you urgently obtain advice if your company is unable to pay superannuation.
If you need assistance, please contact our Brisbane or Gold Coast office. We will be able to advise how we can assist you in an initial obligation free consultation.
