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  • Release from your tax debt

    In certain circumstances, we will remove some or all of your tax debt. We call this 'release' from payment.

    This is only possible if you're experiencing serious hardship – that is, when payment of your debt would leave you unable to provide food, accommodation, clothing, medical treatment, education or other necessities for yourself, family, or other people you are responsible for.

    Who can apply?

    You can apply for release from your tax debt if you are:

    • an individual (including if you are self-employed or a sole trader who is no longer trading)
    • the trustee of the estate of a deceased person, if payment of the debt would cause serious hardship for the dependants of the deceased estate.

    Companies, trusts and partnerships cannot apply for release from tax debt. If your company, trust or partnership has a tax debt and you are having difficulty paying:

    • phone us on 13 11 42 between 8.00am and 8.00pm Monday–Friday to discuss your options.

    Which tax debts can we release?

    The only tax debts we can legally consider for release are:

    • income tax
    • pay as you go (PAYG) income tax instalments
    • fringe benefits tax
    • fringe benefits tax instalment
    • Medicare levy
    • Medicare levy surcharge
    • withholding taxes on dividends, interest or royalties
    • mining withholding tax
    • managed investment trust withholding tax
    • some penalties and interest charges associated with these debts.

    If we can't release any of your tax debt and you are experiencing serious hardship:

    How do we assess release?

    We take into account your household's income and expenditure, as well as assets and liabilities. We then consider other factors that may affect your ability to pay.

    Your application for release and any supporting documents should provide enough information for us to understand your circumstances. This will help us work out how we can help you.

    Income and expenditure

    We look at your household's fortnightly income and expenditure to determine if you have the ability to pay all or part of your debt. We may then assist you with arranging a suitable payment plan to pay your debt off over time.

    Assets and liabilities

    We look at your assets and liabilities to determine whether the income from selling particular assets indicates you could pay all or part of your debt.

    We won't suggest selling assets such as your residential home, motor vehicle, household goods, tools of trade and savings for necessities, as long as they are reasonable compared to community standards.

    Generally, we consider making a major purchase while you are aware of your tax debt to be unreasonable.

    Other factors

    If we've established that payment of your tax debt would cause you serious hardship, we’ll look at other factors within your control that have contributed to your circumstances.

    These factors include:

    • whether you have spent funds or sold assets without allowing for tax debts
    • whether you have other debts and release from your tax debt would not reduce your hardship
    • whether your circumstances are likely to improve soon and another solution may be appropriate
    • your history of lodging and paying your tax obligations
    • whether you can demonstrate that you have planned for future tax debts.

    We will consider other factors that are outside of your control.

    See also:

    Are you eligible for debt release?

    Use the Debt Release Tool to see if you are eligible for debt release and to access the application form.

    Before we can consider your application:

    • you must lodge all of outstanding income tax returns and activity statements as we need to know the total amount you owe
    • you must provide up-to-date contact details so we can contact you during the process
    • any unresolved dispute with us (for example, if you have objected to an income tax assessment) will need to be finalised first
    • any unresolved compensation, damages or insurance claim will need to be finalised first.

    If you need more information before applying, phone us on 1300 788 347, select option 2 between 9.00am and 6.00pm Monday–Friday.

    Note: If you are not eligible for release, the tool will advise you of alternative solutions that fit your circumstances.

      Last modified: 20 Nov 2018QC 27193