You resigned as director. The ATO still sent you a penalty notice.

The penalty attaches to the period, not to your current role

If you resign as a director of the company, you can still be liable for director penalties relating to company liabilities that were due before the date of your resignation, or became due after your resignation but relate to a period when you were still a director. This includes PAYG withholding liabilities if the first withholding event in that reporting period occurred before you resigned, GST liabilities if the reporting period ended before you resigned, and superannuation guarantee charge liabilities if the reporting period ended before you resigned.

Construction business directors often assume that resigning removes future exposure. It does not. Your liability is determined by when the company's obligation arose, not by whether you are still listed on the ASIC register when the ATO issues the notice. If the company failed to pay or report tax for a quarter that covered your time as director, that debt can follow you long after you have left.

Why the notice arrives after you leave

If your company doesn't pay certain liabilities by the due date, the ATO can recover these amounts from you personally as a current or former company director. The personal liability is incurred automatically when the company fails to meet its obligation by the due date. The director penalty notice is confirmation that the ATO is now pursuing that liability, not the point at which the liability begins.

The ATO may issue the notice months or even years after you resign, particularly if the company continues to trade without addressing the outstanding liabilities or if it enters external administration. Many former directors receive a notice only after the company has been wound up or deregistered, discovering at that stage that the debt has become their personal responsibility.

Source: Official guidance

Check which periods the notice covers

The notice will state the unpaid amounts you are liable for, the type of liability (PAYG withholding, GST or superannuation guarantee charge), and the periods to which those amounts relate. Your first task is to confirm whether those periods overlap with your time as a director. If the reporting period ended before you resigned, or the first withholding event occurred while you were still a director, the liability can attach to you.

Obtain the company's ASIC records showing your appointment and resignation dates, the lodgement history for the periods stated in the notice, and any correspondence between the company and the ATO during those periods. This record clarifies whether the notice is correct and what remission options remain available to you. Do not assume the ATO has made an error simply because you were no longer a director when the notice was issued.

Understand your remission options within 21 days

The notice outlines the unpaid amounts that you are liable for and remission options available to you. The notice will outline options you can take to remit the penalty. You have 21 days to take one of those options. The 21-day period starts on the day the ATO posts or leaves the notice at the address registered with ASIC, not the day you receive or open it.

If the liabilities were reported within the applicable timeframes, you may be able to remit the penalty by having the company pay the amount in full, appointing an administrator or small business restructuring practitioner, or beginning to wind up the company. If the liabilities were reported late or never reported, the only way to remit the penalty is to pay the company liability in full. The notice will state which remission paths are available. Read it carefully, because those 21 days determine what you can and cannot do.

Get advice before the window closes

If you have received a director penalty notice for a company you left, bring the full notice, the envelope showing the posting date, your ASIC appointment and resignation records, and the company's lodgement history to an appropriately qualified tax or insolvency adviser within days. Ask them to confirm the periods covered, whether the liabilities were reported on time, what remission options are stated in the notice, and whether a statutory defence may apply.

Do not ignore the notice or assume it will go away because you are no longer involved in the company. Resigning as a director does not remove your obligation or alleviate the penalty. The ATO can recover penalty amounts from you 21 days after issuing the notice, and those recovery actions include garnishee notices, offsetting tax refunds, and legal proceedings. CRP coordinates independent qualified professionals who can assess your position, clarify the applicable remission rules, and help you respond within the 21-day window. Call CRP today for turnaround support tailored to your circumstances.