What happens if you don't pay
When you owe tax which you can't pay by the due date, contact us before the due date so we can help you while it’s still manageable.
We’re committed to:
- listening to your situation
- helping you get back on track
- providing tools and services to help with paying.
If you don't pay your debts on time, we will:
- apply general interest charge on your unpaid amounts
- contact you soon after the due date by one of the following methods
- SMS
- messages in myGov
- letter
- phone
- use any future refunds or credits to repay the amounts you owe.
Your debt may also be referred to an external collection agency.
If your debts remain overdue, we may take firmer action or legal action to collect it.
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 overdue and is added to your account periodically.
We revise GIC interest rates quarterly.
You can request a remission of some, or all, of your interest. We may remit the interest if you have extenuating circumstances which caused your delay in payment.
Offsetting your refund or credit
If you have a debt with us, including a debt on hold, we're required by law to use any refunds or credits you become entitled to, to pay off the debt. This is what we call offsetting.
There are limited circumstances in which we have the discretion not to offset your refund or credit against your tax debt. You can find out more in PS LA 2011/21 Offsetting of refunds and credits against taxation and other debts.
In some cases:
- we can also use credits you receive from other government agencies to pay off your debts
- we may be required to pay your refund to other government agencies you have a debt with – for example, if you have an overdue child support payment, part or all of your refund payment may be paid to Services Australia
- we may offset any available income tax refund against your family tax benefit debt with Services Australia.
Once all your debts are paid, we will refund any remaining refund or credit to you.
You can check to see if offsetting has occurred on your statement of account or in ATO online services.
External debt collection agencies
If you have an overdue debt and don't respond to our request to pay, we may send you a pre-referral warning letter. If you don’t respond to the letter or engage with us to pay your debt, you will be referred to the external debt collection agency.
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Agency information |
Phone |
|---|---|
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From 29 January 2024 debt cases may be actioned by an external debt collection agency – recoveriescorp. |
Individuals – 1300 323 495 Registered tax professionals – 1300 352 593 |
If your debt has been referred to recoveriescorp they will contact you to request payment by phone call, email, SMS or letter. If you're not sure whether it's really them, don't reply. You should phone them using the numbers listed to verify the contact.
If you have a registered tax professional they may be contacted on your behalf.
If you're still unsure, you can view our tips on how to verify or report suspected tax related scams.