The Tax Ombudsman’s director penalty notice review is real news, and it is welcome. But it does not touch the notice in your hand. It examines how the ATO runs the DPN system, it reports in April 2027, and nothing in its terms of reference suspends a single notice. If you received a DPN this month, your 21 days are running today. This guide sets out what the review covers, the rules that still bite, and how quickly each way of clearing the debt actually moves.
What is the Tax Ombudsman reviewing?
The Inspector-General of Taxation and Taxation Ombudsman (the IGTO, usually called the Tax Ombudsman) opened its first systemic review of DPNs in September 2026. Submissions closed on 29 September 2026. According to the terms of reference, it will look at whether, “before, during and after issuing a DPN”, the ATO:
- gives current and former directors adequate, timely information about their obligations, the penalty, the underlying debt and their options;
- consistently considers each director’s circumstances, including during debt recovery;
- responds consistently to vulnerability, coerced directorships and financial abuse.
It also lists what is out of scope: broader ATO debt collection, and wider corporations, insolvency and small business restructuring law, except where needed to understand DPNs. Put simply, it is a review of how the ATO behaves, not of the law that makes directors personally liable.
The trigger is volume. In a speech to the Tax Institute’s Tax Summit, the ATO’s Deputy Commissioner reported that in 2024-25 the ATO issued more than 84,000 DPNs to directors of around 64,000 companies. That sat alongside more than 15,000 garnishee notices and around 24,000 business debts disclosed to credit reporting bureaus. The Tax Ombudsman’s own material describes the DPN count as a 136% increase on the year before.
Does the DPN review stop or pause the 21 days?
No. Nothing in the review suspends the ATO’s power to issue DPNs or to recover the penalty once the 21 days are up. Commentary from accounting and law firms since the review opened says the same thing: directors remain personally exposed while it runs.
The timing makes the point on its own. A notice posted in October 2026 expires in November 2026. The final report is due in April 2027. Even if the report recommends changes and the ATO accepts them, that usually shapes future practice. It is very unlikely to reopen a notice whose window has already closed.
So the honest answer to “should I wait for the DPN review?” is no. Use the review as a reason to keep good records of every ATO contact (it is about communication, after all), but not as a reason to slow down.
Which DPN rules still apply right now?
The core rules on the ATO’s director penalties page are unchanged:
| Rule | What it means for you |
|---|---|
| The 21-day clock | It starts on the day the ATO posts the notice or leaves it at the address registered with ASIC, not the day you open it |
| Standard (non-lockdown) DPN | Where PAYG withholding or GST was reported within 3 months of the due date, the penalty is remitted if, within 21 days, the company pays in full, appoints an administrator or a small business restructuring practitioner, or begins to be wound up |
| Lockdown DPN | Where the liability was reported more than 3 months late, or not at all, the penalty can only be remitted by paying the company liability in full |
| Estimates | The ATO can issue a DPN on an estimated liability where lodgments are missing |
| After day 21 | The ATO may recover from you personally, including by garnishee notice, offsetting your tax credits or legal proceedings |
Two common mistakes cost directors the most. First, counting from the day the envelope was opened, which can lose several days to a slow mail run or an old registered address. Second, assuming a payment plan fixes it. A plan is not on the ATO’s list of ways to remit a standard penalty, and for a lockdown DPN only full payment works. Our comparison of an ATO payment plan vs a business loan goes deeper on when a plan still makes sense for the wider company debt.
It is also worth knowing that general interest charge incurred on or after 1 July 2025 is no longer tax deductible, so carrying the debt is dearer in real terms than it used to be.
What can you realistically do inside 21 days?
For most directors who want to keep trading, it comes down to paying the company debt, and the question becomes where that money comes from and how fast it can land. Here is how the main routes compare on speed and fit.
| Route | Remits a lockdown DPN? | Realistic timing | Best fit |
|---|---|---|---|
| Pay from cash reserves | Yes | Same day | Rare, but simplest if the cash exists |
| Caveat loan over property | Yes, if it pays in full | Within 24 hours in some approved cases; often a few business days | A director or company with equity and a clear exit |
| Private second mortgage | Yes, if it pays in full | Usually a few business days, sometimes longer with a first mortgagee’s consent | Larger debts and a longer runway to repay |
| Unsecured business loan | Yes, if it pays in full | Can be quick with clean bank statements | Trading businesses with smaller debts |
| ATO payment plan | No | Can be set up quickly | Managing the company account, not remitting the penalty |
| Administration or restructuring | Not for lockdown | Depends on the practitioner | Standard DPNs where trading on is not viable |
Property-secured funding commonly runs from $20,000 to $5,000,000, and unsecured options for trading businesses commonly run from $5,000 to $500,000. The caveat loans page explains why a caveat is often the quickest property-backed tool when the clock is short.
If paying the debt in full is the route you are leaning towards, you can check what funding could fit your notice while you gather the rest of the paperwork. It does not commit you to anything.
What does a sensible day-by-day plan look like?
Directors who get through a DPN cleanly tend to follow roughly the same order. Treat this as a working sequence, not legal advice on your notice.
Days 1 to 2: pin down the facts. Find the date on the notice and count 21 calendar days. Confirm whether it is standard or lockdown. Ask the ATO, or your tax agent, for the exact amount needed to remit the penalty and the date it is good until.
Days 2 to 4: choose the route. If insolvency options are genuinely on the table (standard DPN only), speak to a registered practitioner now, not on day 19. If you want to keep trading and pay, decide what security you can offer and who owns it.
Days 3 to 7: apply for funding. Send the notice, the payout figure, ID and property or bank details in one go. Our guide to how fast you can get a business loan explains why a complete file moves days faster than a partial one.
Days 7 to 17: approval and settlement. Respond to lender questions the same day. If a first mortgagee’s consent is needed for a second mortgage, chase it daily, because it is the most common hold-up.
Days 17 to 20: pay and confirm. Pay the ATO with a few days to spare and ask for written confirmation that the penalty has been remitted. Keep it with your records.
Illustrative example: two directors, two DPNs
Illustrative example. Business A and Business B each receive a DPN in the same week for about $180,000 of unpaid PAYG withholding and GST.
Business A’s director reads about the Tax Ombudsman review online and decides to hold off, hoping the process will soften. They also learn the BAS was lodged more than three months late, so it is a lockdown DPN. Day 21 passes. The penalty now sits with the director personally, and the ATO can move to garnishee or offset. The review’s April 2027 report will not change that.
Business B’s director confirms the type on day 1, gets the payout figure on day 2 and applies on day 3 with a caveat loan in mind over an investment property with solid equity. The exit is a planned refinance once the company’s ATO account is clear. Funds settle with several days to spare, the company debt is paid in full and the director gets written confirmation that the penalty is remitted. The cost of private funding priced for speed is real, but it is known, and it buys back control. For the full product view, see director penalty notice loans.
What should you tell a lender about a DPN?
Be upfront. A DPN is not a reason for a private lender to say no, but surprises are. Tell them:
- the posting date and the last day to pay;
- whether it is standard or lockdown;
- the exact payout figure from the ATO;
- any other ATO debt, garnishee notices or credit reporting disclosure;
- your exit, meaning how the loan itself will be repaid.
The tax debt loans hub covers which security and structures suit ATO debt, including when the company borrows with a director guarantee and when the director borrows against their own property.
Ready to get ahead of the 21 days?
The Tax Ombudsman may well make the DPN system fairer for directors in future, and that is worth following. But your notice runs on the ATO’s clock, not the review’s. We work with directors facing DPNs regularly, and the ones who come out best are those who start early and know their numbers.
Our application is a short quiz that takes about a minute. Asking won’t touch your credit file and won’t affect your credit score. We don’t send your details to a pile of lenders, so your phone won’t light up with strangers. A real person reads your situation and calls you to talk it through. Please fill the quiz in accurately, especially the notice date and the amount, so the first match we suggest is the right one. Prefer to talk first? Call 03 4059 1829.