ATO Director Penalty Notices Face Tax Ombudsman Review
Synopsis
The Tax Ombudsman is reviewing the ATO’s use of Director Penalty Notices after a sharp rise in notices raised concerns about fairness, effectiveness and personal liability for company directors.
ATO Director Penalty Notices are now subject to a formal review with over 84,000 notices being issued to directors of around 64,000 companies in 2024–25.
The Tax Ombudsman said the number of such complaints comes to 136% of the previous financial year. The review follows the ATO's increased and accelerated use of DPNs to retrieve some unpaid company tax and superannuation debts.
Review Examines How DPNs Are Used
This inquiry will review ATO's process prior to, during and after the issuance of a DPN.
It will look at case selection, communication with existing and former directors, and personal considerations and the way the ATO approaches statutory defences. The review will also take into account whether directors have sufficient and timely information regarding their liabilities and what actions are available to them.
Directors of a DPN may personally be liable for some company debts such as GST, pay-as-you-go withholding and superannuation guarantee charges. Former directors are also liable for debts that are incurred during the period of their directorships.
The Tax Ombudsman has highlighted specific issues with directors who are ill, vulnerable, directors who have been forced to serve, financial abuse. The review is the result of the Ombudsman's 2025 work around financial abuse in the tax system.
Consultation Opens as ATO Debt Collection Expands
Review will be based on complaints, ATO information on the administration of DPNs and stakeholder feedback, the Tax Ombudsman said.
Current and former directors, tax professionals, financial counsellors, small-business advisers and community organisations can provide input. The deadline for submitting is September 29, 2026, and the final report will be submitted in April of 2027.
The review does not consider the ATO's broader debt collection processes or its general corporations law regime unless these are relevant to the operation of DPNs. It states that its purpose is to evaluate the fairness, effectiveness and the presence of suitable safeguards in the administration of DPN.
Source: Smart Company
Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
