--- title: "Lockdown Director Penalty Notices: No Way Out | Astris Law" description: "A lockdown DPN cannot be avoided by appointing a liquidator. When the ATO issues one, why it is worse and what a director can still do about it." lang: en-AU json-ld: | [ { "@context": "https://schema.org", "@type": [ "LegalService", "LocalBusiness" ], "@id": "https://www.astrislaw.com/#organization", "name": "Astris Law", "legalName": "Astris Law Pty Ltd", "alternateName": [ "Astrons General Counsel", "Phronesis Litigation", "HeadStart Counsel" ], "url": "https://www.astrislaw.com", "logo": { "@type": "ImageObject", "url": "https://www.astrislaw.com/android-chrome-512x512.png", "width": 512, "height": 512 }, "image": "https://www.astrislaw.com/android-chrome-512x512.png", "description": "The Astris Law group gives directors and business owners the right legal capability for whatever their business needs, across corporate, disputes and regulatory. 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You cannot remit the penalty by appointing an administrator or liquidator and the only way out is payment of the company's debt in full. Whether you receive a lockdown notice or a standard one depends entirely on when the company lodged, not on when or whether it paid. 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You cannot remit the penalty by appointing an administrator or liquidator and the only way out is payment of the company's debt in full. Whether you receive a lockdown notice or a standard one depends entirely on when the company lodged, not on when or whether it paid. This article explains the 3 month rule for PAYG withholding and GST, the harsher due date rule for superannuation guarantee charge and the lodgement discipline that keeps directors on the right side of the line. Last reviewed 12 February 2026 · Reviewed by [Jamie Nuich](/attorney/jamie-nuich), Legal Practitioner Director ## Key Takeaways - A lockdown DPN applies where the company reported PAYG withholding or GST more than 3 months after the due date, never reported them at all or reported SGC after the SGC due date. The penalty can only be remitted by paying the company liability in full. - Lodgement date decides everything and payment is irrelevant to the classification. A company that lodges on time and pays nothing keeps its directors in standard DPN territory with the full menu of remission options. A company that lodges late has already locked its directors in, even if it later pays most of the debt. - Where the company never lodges, the ATO can issue a reasonable estimate of the liability and serve DPNs on the estimate. The law treats estimated amounts as never reported, which means lockdown. - The lockdown rules reach new directors. Joining a company whose lodgements are more than 3 months behind can deliver you a locked down penalty for periods before your appointment. - The same lodgement failures that trigger lockdown also disqualify the company from the insolvent trading safe harbour in s 588GA and from small business restructuring, both of which require tax lodgements to be current. In This Article 1. [1. What Makes a DPN a Lockdown Notice?](#what-makes-a-dpn-a-lockdown-notice) 2. [2. Why Lodgement Beats Payment](#why-lodgement-beats-payment) 3. [3. Estimates: Lockdown Without Lodgement](#estimates-lockdown-without-lodgement) 4. [4. The Reach Into Old Periods and New Appointments](#the-reach-into-old-periods-and-new-appointments) 5. [5. What You Can Still Do With a Lockdown DPN](#what-you-can-still-do-with-a-lockdown-dpn) 6. [6. The Position in One Paragraph](#the-position-in-one-paragraph) Directors who have heard of director penalty notices usually know one thing about them: you get 21 days and if you put the company into administration or liquidation within those 21 days you avoid personal liability. That knowledge is correct for one type of notice and dangerously wrong for the other. The lockdown DPN removes those options entirely and by the time the notice arrives the classification has already been decided by lodgement dates that may be years old. If you are unsure which side of the line your company sits on, the lodgement history will tell you in ten minutes. [Contact Astris Law](/contact) on (07) 3519 5616 if you would like that conversation to happen with advice attached. ## What Makes a DPN a Lockdown Notice? The director penalty regime in Division 269 of Schedule 1 to the _Taxation Administration Act 1953_ (Cth) draws one distinction that matters more than every other feature of the scheme. It asks when the company reported the liability. For PAYG withholding and GST, the company keeps the standard remission options if it reported the liability within 3 months of the due date. For new directors the 3 months runs from the date of appointment instead. Report inside that window and the penalty can be remitted within 21 days of a notice by paying the debt, appointing an administrator, appointing a small business restructuring practitioner or beginning to wind the company up. Report outside that window, or not at all and the penalty locks down. The remission pathways through administration, restructuring and liquidation disappear and the only way to remove your personal liability is payment of the company's debt in full. For superannuation guarantee charge the window is narrower. The company must lodge its SGC statement by the SGC due date and a statement lodged even a day late produces a locked down penalty. There is no 3 month grace for super, a point we cover in detail in our [guide to SGC exposure](/article/superannuation-guarantee-charge-director-liability). The lockdown label does not appear in the legislation. It is the profession's shorthand for a notice issued in respect of amounts whose remission options have already gone and the ATO's own notices distinguish the two situations on their face. Read the notice carefully, because a single DPN can cover both remittable and locked down amounts for different periods at the same time. ## Why Lodgement Beats Payment The design of the regime rewards disclosure rather than payment and most directors have it the wrong way round. The instinct under cash pressure is to delay the BAS because lodging crystallises a debt the company cannot pay. That instinct converts a manageable corporate problem into a permanent personal one. Consider two companies with identical debts. The first lodges every BAS on time across a bad year and pays nothing, accumulating $300,000 in unpaid PAYG withholding and GST. The second lodges nothing for the same year and owes the same $300,000. The directors of the first company can still escape personal liability by restructuring or winding up within 21 days of any DPN. The directors of the second company owe $300,000 personally and no insolvency appointment will change that. Same debt with opposite outcomes and the only difference is lodgement. The rule that falls out is the cheapest compliance advice available to any director: lodge on time even if you cannot pay. Lodgement is what preserves your options. It also keeps the company eligible for the arrangements that solve tax debt problems, because the ATO will generally not agree to a payment plan for an unlodged liability it cannot see, small business restructuring requires lodgements to be current and the insolvent trading safe harbour in s 588GA is unavailable while tax reporting obligations are outstanding. Our [section 588G guide](/article/insolvent-trading-directors-guide-section-588g) covers that last interaction. ## Estimates: Lockdown Without Lodgement Silence does not stall the regime. Where the company fails to report, the ATO can make a reasonable estimate of the unpaid amount, issue the estimate to the company and serve DPNs on the estimated liability. The law treats estimates as amounts that were never reported, so the resulting penalties are locked down from the moment they arise. Estimates carry a second sting. The ATO builds them from the information it holds, single touch payroll data, superannuation fund reporting and prior lodgement patterns and the figure can overstate the true liability. You can challenge an estimate, including by statutory declaration in some circumstances, but the challenge does not pause recovery timeframes. A company that has stopped lodging has handed the ATO the power to define its debt and its directors' personal exposure in one document. ## The Reach Into Old Periods and New Appointments Lockdown liability is patient. The 3 month clock runs from the original due date of each lodgement, so a company that catches up two years of BAS lodgements in one sitting has reported every one of those periods more than 3 months late. The catch up that feels like virtue locks in the directors for the whole backlog. That is worth knowing before the catch up, not after, because the sequencing of lodgements, payment arrangements and any insolvency appointment changes the personal outcome significantly. New directors face the same trap from the other direction. A new director becomes liable for director penalties on amounts due before their appointment unless the company pays, appoints an administrator or restructuring practitioner or begins winding up within 30 days. Where the company's lodgements were already more than 3 months late before the appointment, the inherited penalties are locked down and the 30 day window offers nothing except payment. Due diligence on the lodgement history is the only protection and it has to happen before you sign the consent to act. ## What You Can Still Do With a Lockdown DPN A lockdown notice narrows the field but does not empty it. The remaining moves, roughly in order of usefulness: - Verify the classification. Pull the lodgement history and test the ATO's position, because notices sometimes treat amounts as unreported where lodgement evidence exists and a misclassified amount may still carry remission options. - Verify the amounts, especially estimates. An overstated estimate can be challenged even though the underlying penalty is locked down. - Consider the statutory defences. Illness or another good reason for non-participation, all reasonable steps and for SGC and GST a reasonably arguable position, all remain available against locked down penalties. The courts construe them narrowly and our [flagship DPN guide](/article/director-penalty-notices-australia) covers the case law. - Negotiate. The ATO can agree to payment arrangements for director penalty liabilities and an engaged director with a credible proposal is in a different position to one who has gone quiet. - Take personal insolvency advice early if the number is unpayable. That conversation is better had with months of runway than weeks. What you cannot do is appoint your way out. Administrators and liquidators solve the company's problem and with a lockdown DPN the company's problem and yours have come apart. ## The Position in One Paragraph Lodgement dates decide whether a director penalty can ever be remitted, so the company's BAS and SGC discipline is the director's personal asset protection. Lodge on time even when the company cannot pay, treat any plan to catch up old lodgements as a legal decision rather than a bookkeeping one, check the lodgement history before joining any board and read any DPN carefully to see which amounts still carry options. By the time a lockdown notice arrives the classification is fixed, but the amounts, the defences and the negotiation are still live. This guide is part of our [Director Liability and ATO Compliance hub](/resources/director-liability-ato-compliance), which collects the full series alongside our related guides on insolvency and directors' duties. If you have received a lockdown DPN or the company's lodgements are behind, please [get in touch](/contact) or call (07) 3519 5616. ## Sources and References - Legislation Taxation Administration Act 1953 (Cth) Sch 1 Div 269, including the remission and estimates provisions - Legislation Corporations Act 2001 (Cth) Pt 5.3B (small business restructuring) and s 588GA (safe harbour preconditions) - Regulator ATO, Director penalties (QC 44005) - Regulator ATO, Law Administration Practice Statement PS LA 2011/18 ![Jamie Nuich, Legal Practitioner Director at Astris Law](/images/jamie-nuich-portrait.jpg) ### [Jamie Nuich](/attorney/jamie-nuich) Legal Practitioner Director - Admitted as a Solicitor of the Supreme Court of Queensland - Admitted as a Solicitor of the High Court of Australia - 15+ years advising directors on commercial law, litigation, regulatory investigations and workplace matters Jamie is the founder and Legal Practitioner Director of Astris Law. She has acted first-hand for directors in urgent injunction applications, shareholder disputes, ASIC prosecutions and regulator-led investigations across Federal and State jurisdictions. She is a solicitor advocate who runs her own applications and trials where appropriate, so clients keep continuity from first advice through to hearing. Commercial Litigation Corporate & Commercial Regulatory & Compliance Employment & Workplace Anti-Money Laundering (AML/CTF) Disciplinary & Professional Conduct [LinkedIn](https://www.linkedin.com/in/jamienuich/)[QLS Register of Solicitors](https://www.qls.com.au/register-of-solicitors/jamie-leanne-nuich)[You and the Law directory](https://www.youandthelaw.com.au/organisation/98611/astris-law-pty-ltd)[Astris Law profile](/attorney/jamie-nuich) Share [](https://www.linkedin.com/sharing/share-offsite/?url=https%3A%2F%2Fwww.astrislaw.com%2Farticle%2Flockdown-dpn-director-penalty "Share on LinkedIn")[](https://twitter.com/intent/tweet?url=https%3A%2F%2Fwww.astrislaw.com%2Farticle%2Flockdown-dpn-director-penalty&text=Lockdown%20DPNs%3A%20When%20Liability%20Cannot%20Be%20Remitted "Share on X")[](https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fwww.astrislaw.com%2Farticle%2Flockdown-dpn-director-penalty "Share on Facebook")[](mailto:?subject=Lockdown%20DPNs%3A%20When%20Liability%20Cannot%20Be%20Remitted&body=A%20lockdown%20director%20penalty%20notice%20gives%20you%20no%20options.%20You%20cannot%20remit%20the%20penalty%20by%20appointing%20an%20administrator%20or%20liquidator%20and%20the%20only%20way%20out%20is%20payment%20of%20the%20company's%20debt%20in%20full.%20Whether%20you%20receive%20a%20lockdown%20notice%20or%20a%20standard%20one%20depends%20entirely%20on%20when%20the%20company%20lodged%2C%20not%20on%20when%20or%20whether%20it%20paid.%20This%20article%20explains%20the%203%20month%20rule%20for%20PAYG%20withholding%20and%20GST%2C%20the%20harsher%20due%20date%20rule%20for%20superannuation%20guarantee%20charge%20and%20the%20lodgement%20discipline%20that%20keeps%20directors%20on%20the%20right%20side%20of%20the%20line.%0A%0Ahttps%3A%2F%2Fwww.astrislaw.com%2Farticle%2Flockdown-dpn-director-penalty "Share on Email") This article is for general information purposes only and does not constitute legal advice and should not be relied on as such. 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