DPN Notice: What to do if you’re behind on your business tax debts

Adam talks about the rising cases of A DPN Notice or warning being issued by the ATO and what to do to avoid this or other more serious consequences of being behind on your business tax debt.

Have you been sent a demand letter or a DPN Notice or warning from the ATO?

Recently, the ATO seems to be more aggressive with businesses falling behind in their company and quarterly tax obligations.

The COVID concession period now seems to be over, and the ATO appears to be currently focusing on recouping any unpaid taxes.

If you’re a Float Accounting client, we have already looked after this for you.

If you’re not our client, this might be important information for you.

So, what should you do if you know that you’re falling behind in your tax debt or you’ve been sent a demand letter from the ATO?

1. Make sure all your quarterly BAS’ are up to date.

Did you know that if you had to close the company and liquidate and your quarterly BAS’ are not up to date, the ATO may forfeit your right to have your company serve as your asset protection?

In other words, the ATO will hold the Director personally liable for the debt and come after your personal assets to recoup the money you owe them.

In most cases, if your BAS’ are up to date, it provides you with an opportunity to appoint a liquidator and go through the process with a lot less risk of your personal assets being attacked.

Something as simple as your accountant not lodging your BAS’ on time could be a nightmare of an issue for you.

So, make sure you’re on top of your lodgements.

2. Get on the front foot with any DPN Notice or overdue debt.

The ATO will not simply forget the debt.

So don’t ignore it.

And if you haven’t seen or been sent a letter of demand yet, don’t wait for it.

Act now because outstanding debts will incur interest, and they’ll cost you more in the long run.

The ATO is process-driven, so although you might have a good reason for falling behind in your debt to the ATO, we know things happen in business; once debt recovery is initiated from the ATO, it’s a very impersonal process, and negotiation becomes very difficult.

So, your accountant should negotiate and communicate with you and the ATO ahead of time before it becomes a problem.

Ideally, an interest-free payment plan with the ATO would be great to pay back that debt, or provide you with transparent and ethical advice on what to do if you simply can’t pay your debts.

A sluggish or inadequate response will give you fewer options and poorer results in the end.

Your accountant won’t be paying for it; you will.

3. Try not to make yourself sick from stress.

You know, many businesses are in a similar boat, so working with a good, experienced accountant who isn’t time poor and can spend time with you to assist you will help you keep or get your business back on track.

If liquidation is necessary, a good accountant will be able to assist you with sound advice and should have partners in the business to help guide you through this process.

So, everybody, I hope that’s helped.

I know it can be stressful if you are going through some tax debt issues but be assured that if you handle it correctly and have the proper support around you, you will get through it, and it’s not the end of the world.

If you need any assistance from Float Accounting, we’ll be happy to have a quick chat and give you some sound advice.

Click here to speak to an expert.


The information contained in this publication is for general information purposes only, and does not take into consideration your individual circumstances. You should obtain personalised professional advice before acting upon any information contained herein. To the maximum extent permitted by law, we accept no responsibility for any loss incurred by any person directly or indirectly due to any action taken or refrained from as a consequence of the contents of this publication.

About The Author

Adam Abela
Adam is Co-Founder and the CEO of Float Accounting.