Got a letter from the ATO? What day 21 means for a company director

What the video shows

The Short is 27 seconds of on-screen cards set to music, with nobody speaking. Its four points: small businesses owe the ATO $35.9 billion; director penalty notices rose 136% in a year, to more than 84,000; a notice can turn a company's tax debt into the director's own debt; and there are three things to do this week. It ends on an honest note: some owners clear ATO debt with equity in property they own, and it is not for everyone.

Where the two figures come from

Both numbers were checked against the official reports before this page went up. The Australian National Audit Office's audit of how the ATO manages small business debt puts small business collectable tax debt at $35.9 billion of $54.2 billion in 2024-25, about two thirds of everything owed; the ATO's response to the audit gives the same figure as at 30 June 2025. The director penalty figure is the Tax Ombudsman's: more than 84,000 notices in 2024-25, up 136% on the year before.

What a director penalty notice changes

Until a notice is issued, a company's unpaid PAYG withholding, GST and super guarantee charge are the company's debts. The notice makes each director personally liable for the same amounts; company income tax is not part of it. The clock starts when the ATO sends the notice to the company's registered address, which is why a company still registered at a former accountant's office can lose most of its 21 days before anyone sees the letter.

Which ways out remain depends on whether the amounts were reported on time. If they were, paying in full, or appointing an administrator, a small business restructuring practitioner or a liquidator, can each have the penalty remitted within the 21 days. If they were not, the ATO's position is that only payment lifts it. The guide to what to do when a director penalty notice arrives takes each case in turn.

The three things to do this week, explained

• Get the BAS lodged. A lodged BAS that cannot be paid is a different problem from one never lodged, and the difference decides which options a director keeps. Lodging does not create the debt; leaving it unlodged can take choices away.
• Call the accountant. They can confirm what a notice covers, whether the amounts were reported on time, and whether another option suits the company better than paying.
• Know the funding options. If the answer is to pay, the money has to arrive inside the 21 days, and a lender that wants two years of financials will not get there. Where there is property with equity, a secured business loan can pay the ATO direct; funding a director penalty notice explains when that is the right call.

How a loan like that is repaid afterwards is Paul Stone's subject in the video on a loan to pay off tax debt. This page is general information, not tax advice; have an accountant or registered tax agent read the notice itself.