Director penalty notice: finance options

There are broadly two varieties, and which one you have received changes the options available to you more than any other single fact.

Your accountant or a registered liquidator will confirm which variety you are holding and what the available responses are. Do not work it out from a website, including this one. Work it out from the notice and from advice.

The notice states its own deadline. Act the day it arrives.

• The period generally runs from the date on the notice rather than from the day you opened it. Post, holidays and a full inbox do not extend anything.
• The ATO can send it to the address recorded for you on the ASIC register. If that address is out of date, the notice can be validly issued to somewhere you no longer collect mail. Keep the register current, always.
• Arranging finance takes time, and a short window rules out the slowest and cheapest lenders first. Every day of delay narrows the list.
• Where more than one director is involved, each of you may be exposed. The conversation needs all of you in it.

The deadline

Stated on the notice

The period runs from

The date on the notice

Address it can go to

The ASIC register

Who confirms the variety

Accountant or liquidator

Fastest funding

Second mortgage, private

What finance cannot change

The notice or the clock

This is a situation with several professionals in it, and their roles are genuinely different. Getting the order right saves days.

We will say this plainly because it matters. If a business cannot be traded out, borrowing personally to pay a director penalty rarely improves anybody’s position, and it can make it considerably worse. Take that question to the liquidator before you take it to a lender.

Where the advice is that clearing the underlying liability is the right response, funding is the practical obstacle. These are the routes that move fast enough to matter.

• A second mortgage behind an existing first, where there is equity and the first mortgagee’s consent can be obtained.
• Private funding secured against property, which is the fastest option and the most expensive. It belongs where a permanent facility follows behind it.
• A caveat facility for very short terms, where a defined exit already exists. Never as a resting place.
• A full refinance where the window genuinely allows it, which is the cheapest outcome and the slowest to arrange.
• Business asset refinance, where the company owns plant or vehicles outright and the equity in them can be released.

What finance cannot do is change the notice, extend the period, or negotiate with the ATO. None of that is a broker’s function, and anyone who tells you otherwise should be treated with care.

1. 01The notice itself. Lenders working in this space are familiar with them and will want to see the date and the amount.
2. 02Clear security. A property with identifiable equity, with the existing mortgage statements and the rates notice to prove position.
3. 03The exit. What repays the facility, and by when. A short-term loan without a written exit is one we will not arrange.
4. 04Enough of the trading picture to show the company continues to operate, usually recent bank statements and BAS.
5. 05Identification and, for a second mortgage, the first mortgagee’s details so consent can be requested immediately.
6. 06Your solicitor’s details. Short-term secured lending is document-heavy and independent legal advice is often a condition.

1. 01

   Day one

   Notice photographed and sent to your accountant. Lodgement position confirmed. Advice sought on whether the response is payment or a formal appointment. Finance conversation opened in parallel.

2. 02

   Day one to two

   Security identified. Titles, mortgage statements and rates notices gathered. We approach the lenders whose current appetite and speed genuinely match the window.

3. 03

   Day two to four

   Indicative terms issued. Valuation ordered, often a short-form or desktop assessment where the lender accepts one. Consent requested from the first mortgagee if a second mortgage is involved.

4. 04

   Day four onwards

   Documents issued and signed, independent legal advice obtained where required, settlement booked and funds paid direct to the ATO.

5. 05

   Immediately after

   Refinance work starts on replacing short-term funding with a permanent facility. That work should begin the week the short-term loan settles, not the month before it expires.

That shape is typical of files that move well. It is not a promise, and it assumes clean security, current documents and an accountant who answers the phone. Everything remains subject to lender assessment.

The single most useful habit is unglamorous. Lodge on time, every time, even in a quarter where the money is not there.

• Lodgement and payment are separate obligations. Staying lodged keeps the widest set of options available to you as a director.
• Keep your address on the ASIC register current, and check it when you move. A notice sent to an old address can still be validly issued.
• Superannuation guarantee obligations deserve their own attention, because unpaid super becomes a personal exposure through the same mechanism.
• If you are a director of a company you are no longer involved in running, deal with that properly rather than assuming it has gone away.
• Ask your accountant for a standing review of the company’s ATO position each quarter, not each year.

You are not the first, and you will be alright.