Director Liability in Australia: The Complete Resource

The company structure is supposed to keep business debts away from your personal assets. For most ordinary trading it does. But Australian law contains five distinct regimes that make directors personally liable, and they operate independently of one another. A director can be exposed under several at once arising from the same period of financial difficulty.

The first is insolvent trading. Section 588G of the Corporations Act makes a director personally liable for debts the company incurs while insolvent if there were reasonable grounds to suspect insolvency. The test is suspicion, not knowledge, and liquidators bring these claims years after the company is gone. The second is the general directors duties in ss 180 to 184: care and diligence, good faith and the prohibitions on misusing position or information. ASIC enforces these through civil penalty proceedings, and the most serious breaches are criminal. The third is the ATO director penalty regime, which converts the company's unpaid PAYG withholding, GST and superannuation guarantee charge into a personal debt of the director, dollar for dollar. The fourth is the officer due diligence duty under work health and safety law, which cannot be delegated and carries imprisonment at its most serious end. The fifth is the Australian Consumer Law, under which a director knowingly involved in misleading conduct or false representations faces civil penalties in their own name.

Each regime has its own triggers, its own defences and its own deadlines, and the deadlines are the part directors most often discover too late. This page maps the whole terrain, links to our detailed guides on each regime and explains the one with the shortest fuse: the director penalty notice.

If a notice has already arrived, contact Astris Law on +61 7 4270 8880. Most of these regimes reward early action and punish delay.

The Five Sources of Personal Liability

Maximum penalties as at June 2026. Civil penalty amounts move with the Commonwealth penalty unit and the figures above reflect the current unit value.

The ATO Director Penalty Process and the 21 Day Clock

Of the five regimes, the director penalty regime moves fastest, so it is worth understanding what the ATO actually does. When a company falls behind on PAYG withholding, GST or superannuation guarantee charge, the unpaid amounts accrue as director penalties automatically. The ATO can then issue a director penalty notice to the director's address on the ASIC register. Service is effective when the notice is posted to that address, whether or not the director still lives there or ever reads it.

The notice starts a 21 day clock. What the director can do inside those 21 days depends entirely on which kind of notice it is. A non-lockdown DPN issues where the company lodged its returns on time, broadly within three months of the due date, even though it did not pay. That penalty can be remitted by paying the debt or by putting the company into voluntary administration, small business restructuring or liquidation before the 21 days expire. A lockdown DPN issues where the company reported late or not at all. A lockdown penalty survives administration and liquidation. Payment is the only exit, which is why lodging on time matters even when there is no money to pay: late lodgement converts a manageable corporate problem into a permanent personal debt.

After the 21 days, the ATO can sue the director personally, garnishee personal bank accounts and offset personal tax refunds. Our detailed guides cover the regime, the statutory defences and the day by day playbook for the 21 day window in the Director Liability & ATO Compliance resource centre, including the flagship guide to director penalty notices and responding to a DPN in the first 21 days.

The Director Liability Guides

Frequently Asked Questions