My company owes the ATO more than it can pay — can they come after me personally?

The BAS is lodged. The GST and the PAYG withholding on it are not paid, because the money went to wages and the landlord instead. A few reminder texts have come and gone. The company is a Pty Ltd — and the question underneath all of it is whether that structure still holds when the debt is owed to the ATO.

For three particular amounts, it does not.

The three amounts that follow a director home

A company director can be made personally liable for the company's unpaid PAYG withholding, GST, and super guarantee charge (SGC — the penalty that replaces the super contribution once it is paid late or not at all). Those three, and not the company's income tax. They are called director penalties, and the ATO can recover them 21 days after issuing a director penalty notice (DPN).

A director penalty is what the ATO calls a parallel liability: the director's liability mirrors the company's, so a payment against either reduces both. Where a company has two directors, each is likely to owe the same full amount rather than half of it.

This is not a rare instrument any more. The Tax Ombudsman, announcing a review of the ATO's administration of DPNs scheduled to begin in September 2026, put the 2024–25 figure at more than 84,000 notices issued to directors of approximately 64,000 companies — a 136% increase on the prior year. The backdrop is the debt book: the Australian National Audit Office (Report No. 45 of 2025–26, published 30 June 2026) recorded $35.9 billion of collectable tax debt owed by small business in 2024–25, up 118% since 2018–19.

The decision that is already made by the time the notice arrives

A DPN sets out the options for having the penalty remitted and gives 21 days to take one. What those options are was settled earlier, by the lodgment.

For PAYG withholding and GST reported within 3 months of the due date, the penalty can be remitted within those 21 days by four routes: the company pays in full, an administrator is appointed, a small business restructuring practitioner is appointed, or the company begins to be wound up.

For PAYG withholding and GST reported more than 3 months after the due date — or never reported — the penalty can only be remitted by paying the company's liability in full. Appointing an administrator no longer helps. Amounts the ATO has estimated because nothing was reported are treated as amounts that were never reported.

SGC is stricter again: the four routes are available only if the SGC amount was reported by the SGC due date. Reported late, or never, and payment in full is the only way out.

Which produces the most useful rule in this area, and the one that runs against instinct: lodging on time when you cannot pay keeps every option open, while not lodging closes three of the four. A company that reports a $60,000 GST shortfall on time and cannot pay it is in a different legal position from one that reports the same shortfall four months late.

Resigning does not close it

A former director stays liable for penalties relating to company liabilities that fell due before the resignation, and for some that fell due after it — PAYG withholding where the first withholding event in the reporting period occurred before the resignation, and GST or SGC where the reporting period ended before it. Liability also survives deregistration of the company.

Coming the other way, a new director is not liable for penalties that were due before the appointment if, within 30 days of being appointed, they ensure the company pays the outstanding amount, appoints an administrator or a restructuring practitioner, or is wound up. Resigning inside that window does not undo the exposure. Worth knowing before agreeing to become a director of someone else's existing company: the check to run first is whether it has unpaid or unreported PAYG withholding, GST or SGC.

The other two levers

DPNs are one of three firmer actions the ATO lists. The second is a garnishee notice, which directs someone holding money for you — for a business, typically banks, trade debtors, or merchant facility providers — to pay it to the ATO instead.

The third is disclosure to credit reporting bureaus, and it has a threshold worth knowing. The ATO may report a business tax debt where the business has an ABN and is not an excluded entity, has at least $100,000 overdue by more than 90 days, and is not engaging with the ATO to manage it. A written notice of intent comes first, with 28 days to act. Critically, the ATO states it will not report a debt where the taxpayer is effectively engaging — including where there is a payment plan and its terms are being met — however large the debt is.

What 'engaging' costs, and what it buys

A payment plan does not stop interest. General interest charge keeps accruing and compounds daily; the annual rate for the July–September 2026 quarter is 11.43%. GIC incurred on or after 1 July 2025 can no longer be claimed as a deduction, which changed the real cost of carrying an ATO debt rather than a bank one. Income tax and activity statement accounts also need separate payment plans.

What engagement buys is the gap between a debt that is merely expensive and one that has escalated. The ATO's stated triggers for starting firmer action are refusing to engage, ignoring reminders, repeatedly defaulting on agreed plans, and letting GST, PAYG withholding and employee super go unpaid as a matter of course.

This is general information current as at August 2026, not advice on a particular company or notice. If a DPN has been issued, the 21 days run from the day it is posted to the address registered with ASIC, not from the day it is read — reason enough to keep that address current. Getting activity statements in on time when the cash to pay them is not there is part of the ordinary work in our business accounting service.