What is a debt on hold
A 'debt on hold' is a tax debt we have paused taking actions to collect. We may place a debt on hold if we decide it's not cost effective to collect the debt at the time.
While the debt is on hold:
- it may not appear in your account balance
- we won't contact you to try and collect it (however your debt remains due and legally payable)
- we will use any credits or refunds you're entitled to, to reduce the debt – this is called offsetting.
You may have a debt on hold that is not currently included in your account – even if your current account balance is zero. You can check if you have a debt on hold, including when it was placed on hold.
If your situation changes and we believe it's cost effective to collect your debt on hold, we may take it off hold. This means we will contact you to pay the debt.
Example: what is a debt on hold
In 2018, Kerrie lodged her tax return resulting in a debt of $800.
Kerrie was unable to pay this amount as she was unemployed and looking for a new job.
Following a review of Kerrie's circumstances, we decided to place the debt on hold. This removed the $800 debt amount from Kerrie's account balance and meant Kerrie stopped receiving reminders about the debt.
Kerrie's debt on hold would remain on hold until her situation changed.
End of exampleDebts on hold included in account balances
If you have a debt placed on hold, you will have an account with the ATO. You can access your account through ATO online services.
Previously, your debt placed on hold was not included in your account balance.
We're making it easier for you to keep track of these debts by including them in account balances. We are not doing this for debts placed on hold before 1 January 2017 that may be impacted by the proposed law change.
Once your debt on hold has been included in your account balance, you'll see an increased amount owing.
You can view the details of when your debt was placed on hold. Your debt on hold will be shown in your account as 'Existing debt on hold included in account balance'. It will include the tax types and periods that make up your debt on hold.
Example: including a tax debt on hold in an account balance
In 2018, Sam lodged a tax return for the 2017–18 financial year. This resulted in a tax debt of $200.
In 2020 we placed the debt on hold and stopped taking actions to collect it. The tax debt was removed from Sam's account balance.
In September 2025, Sam received a letter from us stating we were including his debt on hold in his account balance. Sam had no other tax debts owing.
A week later, Sam logged into ATO online services and could see $200 owing in his account balance and a transaction on the account that said 'Existing debt on hold included in account balance – Income Tax for the period 01 Jul 17 to 30 Jun 18'.
End of exampleGeneral interest charge
When you don't pay on time, we automatically add a general interest charge (GIC) to what you owe. This means that your tax debt will grow each day your debt remains unpaid. The GIC rate is updated quarterly.
When debts on hold aren't included in account balances we will remit (reduce) the GIC that is applied. This means you won't pay interest for this period.
Once your debt on hold has been included in your account balance, we will continue to remit GIC for an additional 6 months. After this, GIC will apply and you will need to contact the ATO to seek any further remissions.
You can't claim GIC incurred on or after 1 July 2025 as a tax deduction. If you’re an entity with a substituted accounting period, this applies from your next accounting period starting after 1 July 2025.
Example: GIC applying to your debt on hold
Sasha has a $13,000 debt on hold included in her account balance on 1 September 2025.
There is $700 of GIC that accrued during the period the debt on hold was not included in the account balance. This amount has been remitted from her account.
The GIC that accrued in the 6 months after Sasha's debt was included in her account balance is also remitted. Without any action required by Sasha.
For Sasha, this means GIC will be remitted until 28 February 2026 and then charged on the account from 1 March 2026.
If Sasha’s debt remains unpaid, her account balance may increase due to GIC being charged. For example, if it remains unpaid by 1 May 2026 her debt may increase by $240.20.
Any payments made to reduce the debt owed will ensure Sasha pays less interest.
This example is based on the 10.78% rate of GIC from 1 July 2025 to 30 September 2025. GIC rates are updated quarterly.
End of exampleReducing or paying your debt on hold
When a debt is on hold, it may be reduced by offsetting your refunds and credits against it, or if you make a payment.
Offsetting refunds or credits
When debts are on hold, we won't contact you to pay your debt, but we'll use any refunds or credits you have, to reduce it. This is called offsetting and it's required by law.
In some cases, we'll use your refund or credit from one account to offset your debt on hold on another account. For example, if you're a business, your GST credit may be used to offset your income tax debt on hold.
You can check if we've offset your debt on hold:
- by checking your statement of account
- via ATO online services.
Example: offsetting a tax refund against a debt on hold
In September 2019, Deven lodged a tax return for the 2018–19 financial year, which resulted in a tax debt of $500.
In 2021 we placed the debt on hold as it wasn't cost effective to collect the debt at that time.
In October 2023, Deven lodged tax returns for the 2019–20 to 2022–23 financial years. This resulted in a $1,300 credit.
We offset the $1,300 credit against the $500 debt on hold. This resulted in a tax refund of $800 to Deven and the $500 debt on hold being paid off.
Deven can see that his debt has been offset on his statement of account and in ATO online services.
End of examplePaying your debt on hold
We won't contact you to try and collect your debt while it's on hold, but your debt remains due and legally payable.
You can pay part or all of your debt on hold at any time. This will reduce the GIC that will apply 6 months after your debt on hold has been included in your account balance.
If your debt on hold is:
- included in your account balance you
- can make a payment using ATO online services
- may be able to set up a payment plan to pay by instalments
- not included in your account balance and you want to discuss payment options, contact us.
Example: paying a debt on hold in an account balance
In July 2021, Eddie lodged a tax return for the 2020–21 financial year, which resulted in a tax debt of $200.
In January 2023 we placed the debt on hold and stopped contacting Eddie to pay it.
In August 2025, Eddie received a letter from us informing him that we are including his debt on hold in his account balance.
A week later, Eddie logged into ATO online services and could see the $200 owing in his account balance.
Eddie decides to pay the debt on hold in full before GIC starts to apply in 6 months.
In October 2025, Eddie lodges his tax return. Since his debt on hold has been paid in full, he receives his expected tax refund.
End of exampleView details of your debt on hold
If we've placed your debt on hold and it's:
- included in your account balance, it will appear like any other tax debt with the transaction description 'Existing debt on hold included in account balance'
- not included in your account balance, you can follow the instructions to view your debt on hold, if you:
- want to know when your debt was placed on hold
- are checking if you have a debt on hold that is not currently included in your account balance
- want to see if the debt on hold has been taken off hold or offsetting has occurred.
Support
If you're experiencing financial difficulties and need support, see:
If you need help or have questions about your debt on hold, contact:
- your registered tax professional
- our dedicated number for debts on hold 1800 305 499.
You may also:
- qualify for support from the National Tax Clinic programExternal Link (individuals and small businesses)
- seek assistance from a financial counsellor.
Disagree with a debt on hold
You can't object to our decision to place your debt on hold or take it off hold.
You may be able to object to the relevant assessment or amended assessment that raised the debt if you believe it was incorrectly calculated. To do this you will need to lodge an objection.