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  • 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.

    See also:

    General interest charge

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

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

    Interest rates are revised 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 for some or all of your interest to be remitted (reduced or cancelled):

    Tell us why you think it is fair and reasonable for us to reduce or cancel your interest charges, including 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 in which 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 (for example, 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 money to them. For example, if you have an overdue child support payment, part or all of your refund will be paid to the Department of Human Services.

    Once all your debts have been cleared, 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

    Dun & Bradstreet (Australia) Pty Ltd

    1300 315 994 (Individuals)

    1300 559 148 (Business)

    Collection House

    1300 590 048 (Individuals)

    1300 590 049 (Business)

    Probe Group Pty Ltd

    1300 307 861

    Recoveriescorp

    1300 131 296

    Probe Group Pty Ltd can also deliver debt collection notices in person on our behalf. Their contact number is (03) 9508 4671.

    Which debts are referred and how it affects you

    External debt collection agencies focus on collecting routine income tax and activity statement debts (excluding disputed debts). The value of debts we refer to collection agencies ranges from a few hundred dollars up to as much as $100,000. 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 they are being formally disputed. If you formally dispute your debt after it has been referred to an agency, the debt will be returned 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
    • they aren't paid commissions – they are paid 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 your debt is referred 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 to be made
      • 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 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 be returned 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. You will be asked to provide certain details to establish proof of identity before agency staff can proceed.

    If you think it's a scam

    How to know if the debt collection agency call is legitimate:

    • if you're contacted by a debt collection agency on behalf of us and you’re not sure they are legitimate, check that you are being asked to pay by    
      • BPAY using the ATO biller code 75556
      • a method listed under our How to pay options
    • you can call phone the debt collection agency directly on the numbers listed above to verify who they are
    • you can 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 deliberate avoidance was detected 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).

    Initially, 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 the debt is owed by an individual (or sole trader), partnership, trust, superannuation fund or company, 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.

    Even without issuing a notice, we can collect the penalty by other means, such as withholding a tax refund.

    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 has recognised that the debt is owed, we may execute on the judgment debt in a number of ways, including by filing and serving a bankruptcy notice.

    If judgment debt interest is also imposed, 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 is declared bankrupt, nearly all of their assets are placed with a bankruptcy trustee and then sold 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 given, you will become bankrupt and a trustee will be 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 be wound up, an official liquidator is appointed to sell the company's assets and distribute 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 if the company is allowed to continue trading.

    Last modified: 26 Oct 2017QC 50300