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  • If you don’t pay

    We know that taxpayers, in particular small business operators and sole traders, sometimes have cash flow issues meaning they can’t pay their whole tax bill on time.

    In the case that a tax bill isn’t paid by the due date, engage with us early so we can help you deal with your debt while it’s still manageable. We have a number of tools and services available to support you to address your bill while it’s still manageable

    We’re committed to listening to your situation and helping you get back on track.

    Find out about:

    What happens if you don't pay

    If you don't pay the amounts you owe us on time:

    Make sure you lodge your activity statements and tax returns on time even if you can't pay by the due date. You'll avoid a penalty for failing to lodge on time and we'll know you're aware of your obligations.

    Find out about:

    See also:

    General interest charge

    If you don't pay on time we will automatically add a general interest charge (GIC) to what you owe. Your debt will grow each day your debt remains unpaid.

    Interest calculates on a daily compounding basis on the amount outstanding and added to your account periodically.

    We revise interest rates quarterly.

    You can generally claim a tax deduction for interest charged in the year it's incurred.

    See also:

    Remission of interest

    You can ask us to remit, such as reduce or cancel, some or all of your interest:

    Tell us why you think it is fair and reasonable for us to reduce or cancel your interest charges. Include the circumstances that led to your delay in payment and any steps you've taken to pay what you owe.

    If your request is approved, you must include the amount of the remitted interest in your tax return as assessable income in the year it was remitted.

    See also:

    Using refunds or credits to pay debt

    If you have a debt with us and you're due to receive a refund or credit such as from an earlier tax return or activity statement, we're required by law to use the refund or credit to reduce your debt.

    We're also required to pay your refund to other Australian Government agencies if you owe them money. This includes if you have an overdue child support payment, part or all of your refund payment will go to the Department of Human Services.

    Once all your debts are clear, we'll refund any remaining credit to you.

    We'll notify you in writing if we use your refund to pay a debt.

    If you are in serious financial hardship, we may be able to pay the refund to you instead.

    See also:

    External debt collection agencies

    We refer some debts to external debt collection agencies for collection on our behalf.

    External debt collection agency contact details

    Agency

    Phone number

    Milton Graham

    1300 315 994 (Individuals)

    1300 559 148 (Business)

    Collection House

    1300 590 048 (Individuals)

    1300 590 049 (Business)

    Probe Operations Pty Ltd

    Debt cases are no longer actioned by Probe Operations Pty Ltd as of 31 December 2019.

    Contact the ATO directly on 1300 466 859.

    Recoveriescorp

    Debt cases are no longer actioned by Recoveriescorp as of 31 December 2019.

    Contact the ATO directly on 1300 466 859.

    Probe Operations Pty Ltd will continue to deliver debt collection notices in person on our behalf. Their contact number is (03) 9508 4671.

    Debts we refer and how it affects you

    External debt collection agencies focus on collecting routine income tax, activity statement and super debts (excluding disputed debts). The value of debts we refer to collection agencies ranges up to as much as $500,000. Referral to an external debt collection agency does not affect your credit rating.

    Our research suggests that your experience with an external debt collection agency will be similar to dealing directly with us. External debt collection agencies must meet our service benchmarks.

    Disputed debt

    We don’t refer debts to collection agencies when formally disputed. If you formally dispute your debt after referring to an agency, the debt will return to us for action.

    See also:

    How we work with debt collection agencies

    When we work with agencies:

    • we don't 'sell' the debt – it always remains payable to us
    • we do not pay them commissions – we pay them on a fee-for-service basis
    • we make sure they provide a professional service and their negotiations with you should be of the highest quality
    • we require their staff to apply the same guidelines as our staff in making their decisions about payment of your debt or remission of interest.

    Your privacy and security

    Our contracts with the external debt collection agencies require them to meet all government privacy and security requirements.

    How a debt collection agency will contact you

    If we refer your debt to an agency for collection, they'll notify you in writing before phoning you or your authorised contact.

    Letters issued by an external debt collection agency will include:

    • their company name and contact details
    • an ATO payment slip showing your payment reference number (PRN), for payment  
      • at Australia Post
      • by mail to
        Locked Bag 1936
        ALBURY NSW 1936  
    • by BPAY ® – biller code 75556.

    After the agency has notified you in writing, they will phone you or your authorised contact to negotiate payment of your debt. When an agency contacts you, they'll work with you to reach agreement on how you can pay your debt.

    If the agency is unable to contact you or your authorised contact by phone, they will leave a message.

    If an agreement can't be reached about paying your debt

    If the debt collection agency can't reach an agreement with you about paying your debt, your debt will return to us for further action. We may need to take stronger action to collect your debt, such as:

    • issuing a garnishee notice
    • director penalty notices
    • starting insolvency proceedings.

    Even after we've started stronger recovery action, we will remain willing to work with you to help you resolve your debt.

    If you're not satisfied, visit our complaints page for information about how we can work together to sort out any problems you may have.

    Proof of identity

    When establishing contact, debt collection agency staff must determine they have contacted either you or an authorised person before disclosing they are from a collection agency. They will ask you to provide certain details to establish proof of identity before they can proceed.

    If you think it's a scam

    To identify if the debt collection agency call on our behalf is legitimate you can:

    • check if they ask you to pay by           
      • BPAY using the ATO biller code 75556
      • a method listed under our How to pay options
    • phone the debt collection agency directly on the numbers listed above to verify who they are
    • phone us directly on 1800 008 540 to verify they are legitimate.

    See also:

    Stronger action

    We're committed to supporting taxpayers who want to do the right thing and preventing those who don't pay from gaining unfair financial advantage. We use stronger action when people:

    • are unwilling to work with us
    • repeatedly default on agreed payment plans
    • don't have the capacity to pay and don't take steps to resolve their situation
    • have been subject to an audit where we detect deliberate avoidance and payment avoidance continues
    • appear to be engaging in phoenix activities (using liquidation to avoid financial obligations without risking assets and with the intention of resuming business operations through a new entity).

    Find out about:

    Stronger action includes:

    In some cases we may take legal action to recover outstanding tax and super debts. The action we take depends on whether an individual (or sole trader), partnership, trust, superannuation fund or company owes the debt and may include:

    Garnishee notices

    We can issue a garnishee notice to a person or business that holds money for you, or may hold money for you in the future. This requires them to pay your money directly to us to reduce your debt. We'll send a copy of the notice to you.

    For individuals, we may issue a garnishee notice to:

    • your employer or contractor
    • banks, financial institutions and building societies where you have accounts
    • people who owe money to you from the sale of real estate such as purchasers, real estate agents and solicitors.

    For businesses, we may issue a garnishee notice to:

    • your financial institution
    • trade debtors
    • suppliers of merchant card facilities.

    Director penalty notice

    Directors can incur penalties equal to their company's unpaid PAYG withholding liabilities or superannuation guarantee charge. We may issue a director penalty notice enabling us to start legal proceedings to recover the penalty.

    Direction to pay super guarantee charge (SGC)

    We can issue employers with a direction to pay outstanding SGC within a specified period. When an employer receives a direction to pay SGC, they must ensure that they pay the full the amount included in the direction. Non-compliance with the direction is a criminal offence and can incur court enforced penalties or imprisonment.

    Claim or summons

    If you don't work with us to address your debt we may file a claim or summons with the relevant court of your state or territory. Once the court recognises debt owed, we may execute on the judgment debt in a number of ways including by filing and serving a bankruptcy notice.

    If the court imposes judgment debt interest, this amount is not tax deductible.

    Bankruptcy notice

    If you receive a bankruptcy notice, you need to pay your debt or make a payment plan with us within 21 days. If you're unable to do this, we may file a creditor's petition to make you bankrupt. Bankruptcy is a legal declaration that a person is unable to pay their debts. When a person becomes bankrupt, the bankruptcy trustee takes possession of nearly all of their assets and sells them to pay the person's debts.

    We won't seek to bankrupt you if it is clear you're able to pay your debt in a reasonable time. If you're facing bankruptcy action, but believe you can pay your debts, you should provide us with clear evidence of your ability to pay.

    You can go into bankruptcy voluntarily by filing a debtor's petition with the Australian Financial Security AuthorityExternal Link.

    Creditor's petition

    A creditor's petition is essentially an application to the Federal Court or Federal Magistrates Court for a sequestration order to declare you bankrupt. Anyone you owe money to, including us, can file a creditor's petition if you have committed an 'act of bankruptcy' (such as failing to comply with a bankruptcy notice), within the preceding six months.

    If the sequestration order is made, you will become bankrupt and a trustee appointed to manage your estate. This usually involves the sale of the bulk of your assets to pay your creditors, including us.

    The court will not issue the order if you can demonstrate you're able to immediately pay all of your debts.

    Statutory demand

    We can issue a statutory demand for payment to a company that has not paid its debts. A statutory demand requires the company to pay the entire debt or enter into a payment plan with us within 21 days.

    If a company doesn't comply with the statutory demand, we may use the non-payment as evidence that the company is insolvent and apply to the Federal Court to wind up the company.

    Wind-up action

    When a court orders a company to wind up, an appointed official liquidator sells the company's assets and distributes the resulting funds to the company's creditors.

    We'll take action to wind up a company if it has failed to pay its debts and we have not been able to make a suitable payment plan. These circumstances may indicate that the company is insolvent and there could be a risk to us (and possibly to other creditors) that the debt will not be paid.

    Last modified: 24 Feb 2020QC 50300