How do I lodge a DPN defence?

The three defences you can name

Your submission has to say which of these you rely on. A general plea that the penalty is unfair is not a defence.

1. Illness or another acceptable reason. For the whole of the relevant period you did not take part in managing the company because of illness or some other good reason, and it would have been unreasonable to expect you to.
2. All reasonable steps. You took all reasonable steps to have the company pay the amount, or to have an administrator or restructuring practitioner appointed, or to have the company wound up, or there were no reasonable steps you could have taken.
3. Reasonably arguable position. For SGC and GST only: the company treated the law as applying in a way that was reasonably arguable and took reasonable care in doing so, for example a genuine contractor versus employee question.

The DPN defences page explains what the courts have and have not accepted. In short: relying on a co-director, bookkeeper or accountant is not a defence, and the defence must cover the entire period, not just part of it.

What to put in the submission

Keep it factual and dated. A useful structure is:

• Your name, the company name and ACN, and the DPN reference and date.
• The defence you rely on, using the statutory wording.
• A short timeline of the relevant period: when you were appointed, when the amounts fell due, what you did and when.
• Evidence attached and referenced. For illness, medical records covering the full period. For reasonable steps, board minutes, emails instructing payment, insolvency practitioner quotes, finance applications, and anything showing what stopped those steps working. For a reasonably arguable position, the advice or analysis the company relied on at the time.
• A clear statement of what you are asking for: that the Commissioner accept the defence and not recover the penalty.

If you have a registered tax agent, they can lodge it for you and it will usually be handled faster. If the underlying company debt is also disputed, that is a separate process covered under disputing an ATO debt, and it does not replace the defence.

Timing and what happens next

There is no fixed deadline for lodging a defence with the ATO, but the 21 day window for remitting a non-lockdown penalty keeps running regardless. If a remission event is possible, it usually comes first.

The ATO will consider the submission and write back. If it accepts the defence, it will not pursue the penalty. If it rejects it, the ATO can proceed to recovery: offsetting refunds, garnishee notices or court proceedings. The same defence can then be raised in court, where the burden of proof sits with you. The ATO also notes that a director can seek review of a recovery decision under the Administrative Decisions (Judicial Review) Act within 60 days of receiving a garnishee notice or written evidence of recovery.

Because the defences are narrow and most fail, it is worth getting a specialist to read the submission before it goes in. Some accountants will also want to check the information for accountants on how this site works with advisers.

What to do next

1. Decide which of the three defences you are relying on. If none fits cleanly, ask for advice before lodging.
2. Gather dated evidence for the entire relevant period, not just the months around the notice.
3. Deal with the 21 day remission window separately and first if a remission event is possible.
4. Lodge the submission through your tax agent or by post to Technical Leadership and Guidance, PO Box 327, Albury NSW 2640, and keep a copy.

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