Release from your tax debt
In certain circumstances, we can permanently remove some or all of an individual's tax debt. We call this 'release'.
We can only release you from payment of particular tax debts where paying those debts would leave you not able to provide for yourself, your family or others for whom you are responsible. This includes providing for items such as:
- medical treatment
We consider applications for release against the criteria outlined in Practice Statement Law Administration PS LA 2011/17 Debt relief, waiver and non-pursuit. We summarise the conditions in How is release assessed?
Who can apply?
You can apply for release if you are:
- an individual
- the trustee of the estate of a deceased person.
Companies, trusts and partnerships cannot apply to have tax debts released.
If your company, trust or partnership has a tax debt and you are having difficulty paying, you can:
Which tax debts may be released?
The only tax debts that can be considered for release are:
- income tax
- PAYG instalments
- fringe benefits tax (FBT)
- FBT 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.
Not all tax debts can be released. We cannot release debts for:
- PAYG withholding
- excess contribution tax (ECT)
- Division 293 liabilities
- super guarantee charge (SGC)
- director penalty notices.
If there is no part of your tax debt that can be released and you are experiencing serious hardship, you can:
How is release assessed?
We take into account your household's income, expenditure, assets and liabilities to determine serious hardship. We then consider other factors and information provided by you to determine whether it would be appropriate to grant release.
Your application for release and any supporting documents you supply should provide enough information for us to understand your circumstances. This will help us in determining the type of assistance we can provide.
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.
Assets and liabilities
We look at your household's assets and liabilities to identify if the sale of particular assets could repay all or part of your tax debt.
Owning assets such as your residential home, motor vehicle, household goods, tools of trade, and savings for necessities may be regarded as normal and reasonable provided they are fair in relation to community standards.
Generally, we would consider purchasing an asset while you are aware of your tax debt to be unreasonable.
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 serious hardship.
These factors include:
- how your tax debt arose
- have you disposed of funds or assets without providing for tax debts
- if you have other debts you are not able to pay, and releasing you from your tax debt will not improve your financial hardship
- if hardship is temporary and your circumstances are likely to improve, another solution may be appropriate
- your compliance history
- if you can demonstrate that you have provided for future tax debts.
We will consider other factors contributing to your serious hardship that are outside of your control.
Before you apply
Before we can consider your application:
- you must lodge all of your outstanding tax returns and activity statements as we need to know the total amount you owe
- you must provide up-to-date contact information as we may need to contact you during the process
- if you have an unresolved dispute with us (for example, you have objected to an income tax assessment) it will need to be finalised first
- if you have an unresolved compensation, damages or insurance claim it will need to be finalised first.
If you need more information before applying, phone us on 13 11 42 during operating hours (refer to Debt and lodgment enquiries).
How to apply for release
Use the Debt release tool to determine if you are eligible to apply for release and to access the application form.
Individuals experiencing serious hardship may apply for release from paying some tax debts. We take into account your individual circumstances when considering your application.